Yahoo 2012 Annual Report Download - page 61

Sales and marketing expenses for the year ended December 31, 2011 decreased $142 million, or 11 percent, as
compared to 2010. The year-over-year decrease was primarily due to decreased marketing-related expenses.
Marketing-related expenses decreased during the year ended December 31, 2011, compared to 2010, due to the
launch of various 2010 marketing campaigns, including our global branding campaign, for which there were no
similar campaigns in 2011. The decrease in the sales and marketing function was also attributable to a decline in
both sales commissions and third-party service provider expenses.
Product Development
Product development expenses consist primarily of compensation-related expenses (including stock-based
compensation expense) incurred for the development of, enhancements to and maintenance of Yahoo! Properties,
classification and organization of listings within Yahoo! Properties, research and development, and Yahoo!’s
technology platforms and infrastructure. Depreciation expense and other operating costs are also included in
product development.
Product development expenses for the year ended December 31, 2012 decreased $34 million, or 4 percent, as
compared to 2011. For the year ended December 31, 2012, the decline was primarily attributable to a decline in
salaries of $22 million and a decline in stock based compensation expense of $10 million in the product
development function as a result of reduced headcount related to the Q2’12 Restructuring Plan described below.
Product development expenses for the year ended December 31, 2011 decreased $109 million, or 11 percent, as
compared to 2010. The decrease in product development expenses was primarily due to decreased stock-based
compensation expense and the capitalization of otherwise expensed compensation costs in product development
associated with increased efforts in the development of our technology platform and specific products. The
decrease in stock-based compensation expense was primarily due to increased cancellations for stock options and
increased forfeitures for stock-based awards in the year ended December 31, 2011, compared to 2010.
General and Administrative
General and administrative expenses consist primarily of compensation-related expenses (including stock-based
compensation expense) related to other corporate departments and fees for professional services.
General and administrative expenses for the year ended December 31, 2012 increased $43 million, or 9 percent,
as compared to 2011. The increase in the general and administrative function was due to increases of $16 million
in professional services expense, $19 million in legal costs associated with the closure of our Korea business, and
$12 million in stock-based compensation expense primarily due to vesting accelerations upon executive
terminations.
General and administrative expenses for the year ended December 31, 2011 increased $10 million, or 2 percent,
as compared to 2010. The increase was primarily due to increases in stock-based compensation expense,
professional services expense, and travel and entertainment expense for the year ended December 31, 2011,
compared to the prior year.
Amortization of Intangibles
We have purchased, and expect to continue purchasing, assets and/or businesses, which may include the purchase
of intangible assets. Amortization of developed technology and acquired intellectual property rights is included
in the cost of revenue and not in amortization of intangibles.
Amortization of intangibles for the year ended December 31, 2012 increased $2 million, or 7 percent, as
compared to 2011. The year-over-year increase in amortization of intangibles from 2012 to 2011 was primarily
driven by the inclusion of intangibles related to an acquisition in the fourth quarter of 2011. This is offset by a
decrease in amortization expense for fully amortized assets acquired in prior years.
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