Yahoo 2007 Annual Report Download - page 25

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We are likely to experience similar risks in connection with our future acquisitions and strategic investments. Our
failure to be successful in addressing these risks or other problems encountered in connection with our past or future
acquisitions and strategic investments could cause us to fail to realize the anticipated benefits of such acquisitions or
investments, incur unanticipated liabilities and harm our business generally.
Our failure to manage growth, diversification and changes to our business could harm us.
We are continuing to grow, diversify and evolve our business both in the U.S. and internationally. As a result of the
diversification of our business, personnel growth, acquisitions and international expansion in recent years, more
than one-half of our employees are now based outside of our Sunnyvale, California headquarters. If we are unable
to effectively manage a large and geographically dispersed group of employees or to anticipate our future growth
and personnel needs, our business may be adversely affected.
As we grow and diversify our business, we must also expand and adapt our operational infrastructure. Our business
relies on our data systems, billing systems, and other operational and financial reporting and control systems. All of
these systems have become increasingly complex in the recent past due to the growing diversification and
complexity of our business, to acquisitions of new businesses with different systems and to increased regulation
over controls and procedures. To effectively manage our technical support infrastructure, we will need to continue
to upgrade and improve our data systems, billing systems, and other operational and financial systems, procedures
and controls. In particular, any failure of our billing systems to accommodate increasing numbers of transactions
and accurately bill users, advertisers, and Affiliates could adversely affect our business and ability to collect
revenue. These upgrades and improvements will require a dedication of resources and in some cases are likely to be
complex. If we are unable to adapt our systems in a timely manner to accommodate our growth, our business may
be adversely affected.
We have announced and are currently implementing on-going strategic initiatives to better and more efficiently
manage our business. Implementing these initiatives requires significant time and resource commitments from our
senior management. In the event that we are unable to effectively implement these initiatives, we are unable to
recruit, maintain the caliber of, or retain key employees as a result of these initiatives or these initiatives do not yield
the anticipated benefits, our business may be adversely affected.
We have dedicated considerable resources to provide a variety of premium services, which may not prove to
be successful in generating significant revenue for us.
We offer fee-based enhancements to many of our free services, including e-mail, personals, finance, games, music
and sports. The development cycles for these technologies are long and generally require significant investment by
us. We have and will continue to invest in new products and services. Some of these new products and services may
not be profitable or may not meet anticipated user adoption rates. We have previously discontinued certain non-
profitable premium services and may discontinue others. We must, however, continue to provide new services that
are compelling to our users while continuing to develop an effective method for generating revenues for such
services. General economic conditions as well as the rapidly evolving competitive landscape may affect users’
willingness to pay for such services. If we cannot generate revenues from these services that are greater than the
cost of providing such services, our operating results could be harmed.
If our operating expenses continue to increase at a rate faster than we grow revenues as we attempt to
expand the Yahoo! brand, fund product development, develop media properties and acquire other businesses
or technologies, our operating results could be reduced.
We currently expect that our operating expenses will continue to increase as we expand our operations in areas of
expected growth, continue to develop and extend the Yahoo! brand, fund greater levels of product development,
develop and commercialize additional media properties and premium services, and acquire and integrate com-
plementary businesses and technologies. If our expenses continue to increase at a greater pace than our revenues,
our operating results could be reduced.
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