Yahoo 2010 Annual Report Download - page 40

Stock-based compensation expense was allocated as follows (in thousands):
Years Ended December 31,
2008 2009 2010
Cost of revenue .................................................. $ 13,813 $ 10,759 $ 3,275
Sales and marketing .............................................. 182,826 141,537 71,154
Product development ............................................. 178,091 205,971 106,665
General and administrative ........................................ 63,113 79,820 42,384
Restructuring expense (reversals) accelerations, net ..................... (30,236) 11,062 (4,211)
Total stock-based compensation expense ......................... $407,607 $449,149 $219,267
See Note 1—“The Company and Summary of Significant Accounting Policies” and Note 11—“Employee
Benefits” in the Notes to the consolidated financial statements, as well as our Critical Accounting Policies and
Estimates, for additional information about stock-based compensation expense.
TAC. TAC consist of payments made to third-party entities that have integrated our advertising offerings into
their Websites or other offerings and payments made to companies that direct consumer and business traffic to
Yahoo! Properties. We enter into agreements of varying duration that involve TAC. There are generally two
economic structures of the Affiliate agreements: fixed payments based on a guaranteed minimum amount of
traffic delivered, which often carry reciprocal performance guarantees from the Affiliate, or variable payments
based on a percentage of our revenue or based on a certain metric, such as number of searches or paid clicks. We
expense TAC under two different methods. Agreements with fixed payments are expensed ratably over the term
the fixed payment covers, and agreements based on a percentage of revenue, number of searches, or other metrics
are expensed based on the volume of the underlying activity or revenue multiplied by the agreed-upon price or
rate.
Compensation, Information Technology, Depreciation and Amortization, and Facilities Expenses. Compensation
expense consists primarily of salary, bonuses, commissions, and stock-based compensation expense. Information
and technology expense includes telecom usage charges and data center operating costs. Depreciation and
amortization expense consists primarily of depreciation of server equipment and information technology assets
and amortization of developed or acquired technology and intellectual property rights. Facilities expense consists
primarily of building maintenance costs, rent expense, and utilities.
The changes in operating costs and expenses for the year ended December 31, 2010 compared to the year ended
December 31, 2009 are comprised of the following (in thousands):
Compensation
Information
Technology
Depreciation and
Amortization TAC Facilities Other Total
Cost of revenue ......... $ (30,164) $(86,046) $(79,220) $(41,403) $ 1,780 $ (9,148) $(244,201)
Sales and marketing ..... 2,815 (2,129) (740) — (10,519) 29,714 19,141
Product development .... (136,203) 12,516 6,509 — (15,376) 4,562 (127,992)
General and
administrative ........ (36,961) (293) (1,526) — 7,628 (60,868) (92,020)
Amortization of
intangibles ........... — — (7,480) — — — (7,480)
Restructuring charges,
net ................. — — — — — (68,944) (68,944)
Total ................. $(200,513) $(75,952) $(82,457) $(41,403) $(16,487) $(104,684) $(521,496)
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