Yahoo 2010 Annual Report Download - page 37

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Our revenue decrease of 2 percent for the year ended December 31, 2010, compared to 2009, can be attributed
primarily to a decline in our search advertising revenue offset by an increase in display advertising revenue. The
increase in income from operations for the year ended December 31, 2010 reflects a decrease in operating
expenses of $277 million compared to 2009. The decrease in operating expenses is primarily attributable to
decreases in stock-based compensation expense, depreciation and amortization expenses, and restructuring
charges, as well as the effects of the cost savings resulting from our arrangement with Microsoft, offset by
increased marketing expenses.
Cash provided by operating activities is a measure of the cash productivity of our business model. Our operating
activities in 2010 generated adequate cash to meet our operating needs. Cash provided by investing activities in
the year ended December 31, 2010 included net proceeds from sales, maturities, and purchases of marketable
debt securities of $1,097 million and proceeds from the sales of divested businesses of $325 million, offset by
$157 million used for acquisitions, net of cash acquired, and net capital expenditures of $714 million. Cash used
in financing activities included $1,749 million used in the direct repurchase of common stock and $49 million
used for tax withholding payments related to the net share settlements of restricted stock units and tax
withholding-related reacquisition of shares of restricted stock, offset by $167 million in proceeds from employee
option exercises and employee stock purchases.
In February 2010, we sold Zimbra, Inc. for net proceeds of $100 million and recorded a pre-tax gain of $66
million in connection with the sale. In August 2010, we sold HotJobs for net proceeds of $225 million and
recorded a pre-tax gain of $186 million in connection with the sale.
Summary
In the following Management’s Discussion and Analysis, we provide information regarding to the following
areas of our financial results:
• Results of Operations;
• Business Segment Results;
• Transactions;
• Liquidity and Capital Resources;
• Critical Accounting Policies and Estimates; and
• Recent Accounting Pronouncements.
Results of Operations
Revenue. Revenue by groups of similar services was as follows (dollars in thousands):
Years Ended December 31, 2008-2009
% Change
2009-2010
% Change2008 (*) 2009 (*) 2010 (*)
Display ................. $2,042,870 28% $1,866,984 29% $2,154,886 34% (9)% 15%
Search .................. 3,753,719 52% 3,396,396 53% 3,161,589 50% (10)% (7)%
Other ................... 1,411,913 20% 1,196,935 18% 1,008,176 16% (15)% (16)%
Total revenue ........ $7,208,502 100% $6,460,315 100% $6,324,651 100% (10)% (2)%
(*) Percent of total revenue.
We currently generate revenue principally from display advertising on Yahoo! Properties and from search
advertising on Yahoo! Properties and Affiliate sites.
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