Yahoo 2008 Annual Report Download - page 24

complex and require additional technical expertise. As we acquire users who rely upon us for a wide variety of
services, it becomes more technologically complex and costly to retrieve, store, and integrate data that will enable
us to track each user’s preferences. Any difficulties experienced in adapting our architectures and infrastructure to
accommodate increased traffic, to store user data, and track user preferences, together with the associated costs and
potential loss of traffic, could harm our operating results, cash flows from operations, and financial condition.
We have dedicated considerable resources to provide a variety of premium services, which might 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,
photographs, and sports. The development cycles for these technologies are long and generally require significant
investment by us. We have invested and will continue to invest in new products and services. Some of these new
products and services might not generate anticipated revenue or might not meet anticipated user adoption rates. We
have previously discontinued some 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 we are unable to recruit and retain key personnel, we might not be able to execute our business plan.
Our business is dependent on our ability to recruit, hire, motivate and retain talented, highly skilled personnel.
Achieving this objective may be difficult due to many factors, including the intense competition for such highly
skilled personnel in the San Francisco Bay Area, where our corporate headquarters and the headquarters of several of
our vertical and horizontal competitors are located, fluctuations in global economic and industry conditions, changes
in Yahoo!’s management or leadership, competitors’ hiring practices, and the effectiveness of our compensation
programs. If we do not succeed in recruiting, retaining, and motivating our key employees and in attracting new key
personnel, we may be unable to meet our business plan and as a result, our stock price may decline.
If we are unable to license or acquire compelling content at reasonable cost or if we do not develop or
commission compelling content of our own, the number of users of our services may not grow as anticipated,
or may decline, or users’ level of engagement with our services may decline, all or any of which could harm
our operating results.
Our future success depends in part on our ability to aggregate compelling content and deliver that content
through our online properties. We in-license much of the content on our online properties, such as news items,
stock quotes, weather reports, maps and audio and video content, from third-parties. We believe that users will
increasingly demand high-quality audio and video content, such as music, film, speeches, news footage, concerts,
and other special events. Such content may require us to make substantial payments to third parties from whom
we license or acquire such content. Our ability to maintain and build relationships with third-party content
providers is critical to our success. In addition, as new methods for accessing the Internet become available,
including through alternative devices, we may need to enter into amended content agreements with existing third-
party content providers to cover the new devices. We may be unable to enter into new, or preserve existing,
relationships with the third-parties whose content we seek to obtain. In addition, as competition for compelling
content increases both domestically and internationally, our content providers may increase the prices at which
they offer their content to us, and potential content providers may not offer their content to us at all, or may offer
it on terms that are not agreeable to us. An increase in the prices charged to us by third-party content providers
could harm our operating results and financial condition. Further, many of our content licenses with third-parties
are non-exclusive. Accordingly, other Webcasters and other media providers, such as radio or television
providers, may be able to offer similar or identical content. This increases the importance of our ability to deliver
compelling editorial content and personalization of this content for users in order to differentiate Yahoo! from
other businesses. If we are unable to license or acquire compelling content at reasonable prices, if other
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