Yahoo 2007 Annual Report Download - page 31

Microsoft’s unsolicited acquisition proposal has created a distraction for our management and uncertainty
that may adversely affect our business.
On January 31, 2008, we received an unsolicited proposal from Microsoft Corporation (“Microsoft”) to acquire all
of the outstanding shares of common stock of the Company. On February 11, 2008, our Board of Directors
announced that, after carefully reviewing the proposal, it unanimously concluded that the proposal is not in the best
interests of Yahoo! and its stockholders. The Board further indicated that it is continually evaluating all of the
Company’s strategic options. The review and consideration of the Microsoft proposal (and any alternate proposals
that may be made by other parties) have been, and may continue to be, a significant distraction for our management
and employees and have required, and may continue to require, the expenditure of significant time and resources by
us. Microsoft’s unsolicited acquisition proposal has also created uncertainty for our employees and this uncertainty
may adversely affect our ability to retain key employees and to hire new talent. Microsoft’s unsolicited acquisition
proposal may also create uncertainty for current and potential publishers, advertisers and other business partners,
which may cause them to terminate, or not to renew or enter into, arrangements with us. Additionally, we and
members of our Board of Directors have been named in seven purported stockholder class action complaints
relating to the Microsoft proposal as more fully described in Part I, Item 3 “Legal Proceedings” of this Annual
Report on Form 10-K. These lawsuits or any future lawsuits may become time consuming and expensive. These
consequences, alone or in combination, may harm our business.
Our stock price has been volatile historically and may continue to be volatile regardless of our operating
performance.
The trading price of our common stock has been and may continue to be subject to wide fluctuations. During the
year ended December 31, 2007, the closing sale prices of our common stock on the Nasdaq Global Select Market
ranged from $22.52 to $33.63 per share and the closing sale price on February 15, 2008 was $29.66 per share. Our
stock price may fluctuate in response to a number of events and factors, such as quarterly variations in operating
results, announcements and implementations of technological innovations or new services, upgrades and media
properties by us or our competitors; changes in financial estimates and recommendations by securities analysts; the
operating and stock price performance of other companies that investors may deem comparable to us; the operating
performance of companies in which we have an equity investment, including Yahoo! Japan and Alibaba Group
Holding Limited; and news reports relating to trends in our markets or general economic conditions.
In addition, the stock market in general, and the market prices for Internet-related companies in particular, have
experienced volatility that often has been unrelated to the operating performance of such companies. These broad
market and industry fluctuations may adversely affect the price of our stock, regardless of our operating
performance. Additionally, volatility or a lack of positive performance in our stock price may adversely affect
our ability to retain key employees, all of whom have been granted stock options or other stock-based awards.
We further believe that, as a result of Microsoft’s unsolicited acquisition proposal, and speculation concerning a
potential acquisition, the future trading price of our common stock is likely to be volatile and could be subject to
wide price fluctuations. There can be no assurance whether a transaction will occur or at what price. If a transaction
does not occur, or the market perceives a transaction as unlikely to happen, our stock price may decline.
Anti-takeover provisions could make it more difficult for a third-party to acquire us.
We have adopted a stockholder rights plan and initially declared a dividend distribution of one right for each
outstanding share of common stock to stockholders of record as of March 20, 2001. As a result of our two-for-one
stock split effective May 11, 2004, each share of common stock is now associated with one-half of one right. Each
right entitles the holder to purchase one unit consisting of one one-thousandth of a share of our Series A Junior
Participating Preferred Stock for $250 per unit. Under certain circumstances, if a person or group acquires
15 percent or more of our outstanding common stock, holders of the rights (other than the person or group triggering
their exercise) will be able to purchase, in exchange for the $250 exercise price, shares of our common stock or of
any company into which we are merged having a value of $500. The rights expire on March 1, 2011, unless
extended by our Board of Directors. Because the rights may substantially dilute the stock ownership of a person or
group attempting to take us over without the approval of our Board of Directors, our rights plan could make it more
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