Yahoo 2009 Annual Report Download - page 20

The majority of our revenues are derived from marketing services, and the reduction in spending by or loss of
current or potential advertisers would cause our revenues and operating results to decline.
For the year ended December 31, 2009, 88 percent of our total revenues came from marketing services. Our
ability to continue to retain and grow marketing services revenues depends upon:
• maintaining and growing our user base;
• maintaining and growing our popularity as an Internet destination site;
• attracting more advertisers to our user base;
• broadening our relationships with advertisers to small- and medium-sized businesses;
• the successful implementation of changes and improvements to our advertising management platforms and
acceptance of our advertising management platforms by advertisers, Website publishers, and online
advertising networks;
• continuing to innovate and improve users’ search experiences;
• 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, may be terminated at any time by
the advertiser or by 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.
Adverse general economic conditions have caused and could cause 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 adverse economic conditions
have caused, and a continuation of adverse economic conditions could cause, additional decreases in or delays in
advertising spending, a reduction in our marketing services revenues and a negative impact on our short term
ability to grow our revenues. Further, any decreased collectability of accounts receivable or early termination of
agreements, whether resulting from customer bankruptcies or otherwise due to the current deterioration in
economic conditions, could negatively impact our results of operations.
If we do not manage our operating expenses effectively, our profitability could decline.
We have implemented cost reduction initiatives 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 manage costs to better and more efficiently
manage our business. However, 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 our expenses increase at a greater pace than our revenues, or if we fail to implement
additional cost cutting if required in a timely manner, our profitability will decline.
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