Yahoo 2008 Annual Report Download - page 18

• the successful implementation, acceptance and ongoing improvement of our new advertising management
platform, APT from Yahoo!;
• the successful implementation, acceptance and improvement of our search technologies;
• maintaining and expanding our Affiliate program for search and display marketing services; and
• deriving better demographic and other information about our users to enable us to offer better experiences to
both our users and advertisers.
In many cases, our agreements with advertisers have terms of one year or less, or, in the case of search marketing
agreements, may be terminated at any time by the advertiser or Yahoo!. Search marketing agreements often have
payments dependent upon usage or click-through levels. Accordingly, it is difficult to forecast marketing services
revenues accurately. In addition, our expense levels are based in part on expectations of future revenues,
including occasional guaranteed minimum payments to our Affiliates in connection with search and/or display
advertising, and are fixed over the short-term in some categories. The state of the global economy and
availability of capital has and could further impact the advertising spending patterns of existing and potential
future advertisers. Any reduction in spending by, or loss of, existing or potential future advertisers would cause
our revenues to decline. Further, we may be unable to adjust our expenses and capital expenditures quickly
enough to compensate for any unexpected revenue shortfall.
Deterioration in general economic conditions has caused and could cause additional decreases or delays in
marketing services spending by our advertisers and could harm our ability to generate marketing services
revenues and our results of operations.
Marketing services expenditures tend to be cyclical, reflecting overall economic conditions and budgeting and
buying patterns. Since we derive most of our revenues from marketing services, the current deterioration in
economic conditions has caused and could cause additional decreases in or delays in advertising spending and is
likely to reduce our marketing services revenues and negatively impact our short term ability to grow our
revenues. Further, any decreased collectability of accounts receivable or early termination of agreements due to
the current deterioration in economic conditions could negatively impact our results of operations.
If our cost reduction initiatives do not yield anticipated benefits or if we do not manage our operating
expenses effectively, our profitability might decline.
We have implemented cost reduction initiatives designed to better align our operating expenses with our revenues,
including reducing our headcount, outsourcing some administrative functions, consolidating space and terminating
leases or entering into subleases. We plan to continue to implement these initiatives and to manage costs to better
and more efficiently manage our business. Our cost reduction initiatives, however, might not yield the anticipated
benefits. Our operating expenses might also increase, from their reduced levels, as we expand our operations in
areas of desired growth, continue to develop and extend the Yahoo! brand, fund product development, and acquire
and integrate complementary businesses and technologies. In addition, deteriorating economic conditions or other
factors could cause our business to contract requiring us to implement additional cost cutting measures. If we do not
recognize the anticipated benefits of our cost reduction initiatives, our expenses increase at a greater pace than our
revenues, or we fail to implement additional cost cutting if required in a timely manner, our profitability will
decline.
If we are unable to provide innovative search technologies and other services that generate significant traffic
to our Websites, our business could be harmed, causing our revenues to decline.
We deploy our own Internet search technology to provide search results on our network. Internet search is
characterized by rapidly changing technology, significant competition, evolving industry standards, and frequent
product and service enhancements. We must continually invest in improving our users’ experience, including
search relevance, speed, and services responsive to users’ needs and preferences, to continue to attract, retain,
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