Yahoo 2012 Annual Report Download - page 34

• The systems through which we provide our products and services are highly technical, complex, and
interdependent. Design errors might exist in these systems, or might be introduced when we make
modifications, which might cause service malfunctions or require services to be taken offline while corrective
responses are developed.
• Despite our implementation of network security measures, our servers are vulnerable to computer viruses,
worms, hacking, physical and electronic break-ins, router disruption, sabotage or espionage, and other
disruptions from unauthorized access and tampering, as well as coordinated denial-of-service attacks. We may
not be in a position to promptly address attacks or to implement adequate preventative measures if we are
unable to immediately detect such attacks. Such events could result in large expenditures to investigate or
remediate, to recover data, to repair or replace networks or information systems, including changes to security
measures, to deploy additional personnel, to defend litigation or to protect against similar future events, and
may cause damage to our reputation or loss of revenue.
• We rely on third-party providers over which we have little or no control for our principal Internet connections
and co-location of a significant portion of our data servers, as well as for our payment processing capabilities
and key components or features of certain of our products and services. Any disruption of the services they
provide us or any failure of these third-party providers to handle higher volumes of use could, in turn, cause
delays or disruptions in our services and loss of revenue. In addition, if our agreements with these third-party
providers are terminated for any reason, we might not have a readily available alternative.
Prolonged delays or disruptions to our service could result in a loss of users, damage to our brands, legal costs or
liability, and harm to our operating results.
Our international operations expose us to additional risks that could harm our business, operating results, and
financial condition.
In addition to uncertainty about our ability to continue to generate revenue from our foreign operations and
expand our international market position, there are additional risks inherent in doing business internationally
(including through our international joint ventures), including:
• tariffs, trade barriers, customs classifications and changes in trade regulations;
• difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations
as a result of distance, language, and cultural differences;
• stringent local labor laws and regulations;
• longer payment cycles;
• credit risk and higher levels of payment fraud;
• profit repatriation restrictions and foreign currency exchange restrictions;
• political or social unrest, economic instability, repression, or human rights issues;
• geopolitical events, including natural disasters, acts of war and terrorism;
• import or export regulations;
• compliance with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting bribery and
corrupt payments to government officials;
• antitrust and competition regulations;
• potentially adverse tax developments;
• seasonal volatility in business activity and local economic conditions;
• economic uncertainties relating to European sovereign and other debt;
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