Yahoo 2014 Annual Report Download - page 31

If we are unable to recruit, hire, motivate, and retain key personnel, we may not be able to execute
our business plan.
Our business is dependent on our ability to recruit, hire, motivate, and retain talented, highly skilled
personnel. Achieving this objective may be difficult due to many factors, including the intense
competition for such highly skilled personnel in the San Francisco Bay Area and other metropolitan
areas where our offices are located; fluctuations in global economic and industry conditions;
competitors’ hiring practices; and the effectiveness of our compensation programs. If we do not
succeed in retaining and motivating our existing key employees, and in attracting new key personnel,
we may be unable to meet our business plan and as a result, our revenue and profitability may
decline.
If we are unable to attract, sustain, and renew distribution arrangements on favorable terms, our
revenue may decline.
We enter into distribution arrangements with third parties such as operators of third-party Websites,
online networks, software companies, electronics companies, computer manufacturers, Internet
service providers and others to promote or supply our services to their users. For example:
• We maintain search and display advertising relationships with Affiliate sites, which integrate our
advertising offerings into their Websites.
• We enter into distribution alliances with Internet service providers (including providers of cable
and broadband Internet access) and software distributors to promote our services to their users.
• We enter into agreements with mobile phone, tablet, television, and other device manufacturers,
electronics companies and carriers to promote our software and services on their devices.
In some markets, we depend on a limited number of distribution arrangements for a significant
percentage of our user activity. A failure by our distributors to attract or retain their user bases would
negatively impact our user activity and, in turn, reduce our revenue. In some cases, device
manufacturers may be unwilling to pay fees to Yahoo in order to distribute Yahoo services or may be
unwilling to distribute Yahoo services.
In the future, as new methods for accessing the Internet and our services become available, including
through alternative devices, we may need to enter into amended distribution agreements with
existing access providers, distributors, and manufacturers to cover the new devices and new
arrangements. We face a risk that existing and potential new access providers, distributors, and
manufacturers may decide not to offer distribution of our services on reasonable terms, or at all.
Distribution agreements often involve revenue sharing. Competition to enter into distribution
arrangements has caused and may in the future cause our traffic acquisition costs to increase. In
some cases, we guarantee distributors a minimum level of revenue and, as a result, run a risk that the
distributors’ performance (in terms of ad impressions, toolbar installations, etc.) might not be
sufficient to otherwise earn their minimum payments, in which case our payments could exceed the
revenue that we receive. In other cases, we agree that if the distributor does not realize specified
minimum revenue we will adjust the distributor’s revenue-share percentage or provide make-whole
arrangements.
Some of our distribution agreements are not exclusive, have a short term, are terminable at will, or
are subject to early termination provisions. The loss of distributors, increased distribution costs, or
the renewal of distribution agreements on significantly less favorable terms may cause our revenue
to decline.
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