Yahoo 2013 Annual Report Download - page 18

A key element of our strategy is focusing on mobile devices and we expect to continue to devote significant
resources to the creation and support of developing new and innovative mobile products and services. However,
if our new mobile products and services, including new forms of Internet advertising for mobile devices, are not
more attractive and successful in attracting and retaining users, advertisers and device manufacturers than those
of our competitors and fail to generate and grow revenue, our operating and financial results will be adversely
impacted.
To the extent that an access provider or device manufacturer enters into a distribution arrangement with one of
our competitors, or as our competitors design, develop, or acquire control of alternative devices or their operating
systems, we face an increased risk that our users will favor the services or properties of that competitor. We are
dependent on the interoperability of our products and services with mobile operating systems we do not control.
The manufacturer or access provider might promote a competitor’s services or might impair users’ access to our
services by blocking access through their devices or by not making our services or apps available in a readily-
discoverable manner on their devices. If distributors impair access to or refuse to distribute our services or apps,
then our user engagement and revenue could decline.
If we are unable to license or acquire compelling content and services at reasonable cost or if we do not
develop or commission compelling content of our own, the number of users of our services may not grow as
anticipated, or may decline, or users’ level of engagement with our services may decline, all or any of which
could harm our operating results.
Our future success depends in part on our ability to aggregate compelling content and deliver that content
through our online properties. We license from third parties much of the content and services on our online
properties, such as news items, stock quotes, weather reports, video, and maps. We believe that users will
increasingly demand high-quality content and services. We may need to make substantial payments to third
parties from whom we license or acquire such content or services. Our ability to maintain and build relationships
with such third-party providers is critical to our success. In addition, as users increasingly access the Internet via
mobile and other alternative devices, we may need to enter into amended agreements with existing third-party
providers to cover the new devices. We may be unable to enter into new, or preserve existing, relationships with
the third-parties whose content or services we seek to obtain. In addition, as competition for compelling content
increases both domestically and internationally, our third-party providers may increase the prices at which they
offer their content and services to us, and potential providers may not offer their content or services to us at all,
or may offer them on terms that are not agreeable to us. An increase in the prices charged to us by third-party
providers could harm our operating results and financial condition. Further, because many of our content and
services licenses with third parties are non-exclusive, other media providers may be able to offer similar or
identical content. This increases the importance of our ability to deliver compelling editorial content and
personalization of this content for users in order to differentiate Yahoo from other businesses. If we are unable to
license or acquire compelling content at reasonable cost, if other companies distribute content or services that are
similar to or the same as that provided by us, or if we do not develop or commission compelling editorial content
or personalization services, the number of users of our services may not grow as anticipated, or may decline, or
users’ level of engagement with our services may decline, all or any of which could harm our operating results.
Acquisitions and strategic investments could result in adverse impacts on our operations and in unanticipated
liabilities.
We have acquired, and have made strategic investments in, a number of companies (including through joint
ventures) in the past, and we expect to make additional acquisitions and strategic investments in the future. Such
transactions may result in dilutive issuances of our equity securities, use of our cash resources, and incurrence of
debt and amortization expenses related to intangible assets. Our acquisitions and strategic investments to date
were accompanied by a number of risks, including:
• the difficulty of assimilating the operations and personnel of acquired companies into our operations;
• the potential disruption of our ongoing business and distraction of management;
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