Yahoo 2008 Annual Report Download - page 22

We arrange for the distribution of third-party advertisements to third-party publishers and advertising networks,
and we offer third-party products, services, or content, such as stock quotes and trading information, under the
Yahoo! brand or via distribution on Yahoo! Properties. We may be subject to claims concerning these products,
services, or content by virtue of our involvement in marketing, branding, broadcasting, or providing access to
them, even if we do not ourselves host, operate, provide, or provide access to these products, services, or content.
While our agreements with respect to these products, services, and content, often provide that we will be
indemnified against such liabilities, the ability to receive such indemnification depends on the financial resources
of the other party to the agreement and any amounts received might not be adequate to cover our liabilities or the
costs associated with defense of such proceedings.
It is also possible that if the manner in which information is provided or any information provided directly by us
contains errors or is otherwise wrongfully provided to users, third parties could make claims against us. For
example, we offer Web-based e-mail services, which expose us to potential risks, such as liabilities or claims
resulting from unsolicited e-mail, lost or misdirected messages, illegal or fraudulent use of e-mail, or
interruptions or delays in e-mail service. We may also face purported consumer class actions or state actions
relating to our online services, including our fee-based services (particularly in connection with any decision to
discontinue a fee-based service). In addition, our customers, third-parties or government entities may assert
claims or actions against us if our online services or technologies are used to spread or facilitate malicious or
harmful applications. Investigating and defending these types of claims is expensive, even if the claims are
without merit or do not ultimately result in liability, could subject us to significant monetary liability or cause a
change in business practices that could impact our ability to compete.
Acquisitions and strategic investments could result in adverse impacts on our operations and in unanticipated
liabilities.
We have acquired, and have made strategic investments in, a number of companies (including through joint
ventures) in the past, and we expect to make additional acquisitions and strategic investments in the future. Such
transactions may result in dilutive issuances of our equity securities, use of our cash resources, and incurrence of
debt and amortization expenses related to intangible assets. Our acquisitions and strategic investments to date
were accompanied by a number of risks, including:
• the difficulty of assimilating the operations and personnel of our acquired companies into our operations;
• the potential disruption of our on-going business and distraction of management;
• the incurrence of additional operating losses and expenses of the businesses we acquired or in which we
invested;
• the difficulty of integrating acquired technology and rights into our services and unanticipated expenses related
to such integration;
• the failure to successfully further develop acquired technology resulting in the impairment of amounts
currently capitalized as intangible assets;
• the failure of strategic investments to perform as expected;
• the potential for patent and trademark infringement claims against the acquired company;
• the impairment of relationships with customers and partners of the companies we acquired or in which we
invested or with our customers and partners as a result of the integration of acquired operations;
• the impairment of relationships with employees of the acquired companies or our existing employees as a
result of integration of new management personnel;
• our lack of, or limitations on, our control over the operations of our joint venture companies;
• in the case of foreign acquisitions and investments, uncertainty regarding foreign laws and regulations and
difficulty integrating operations and systems as a result of cultural, systems, and operational differences; and
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