Yahoo 2014 Annual Report Download - page 34

Any failure to manage expansion and changes to our business could adversely affect our operating
results.
If we are unable to effectively manage a large and geographically dispersed group of employees or
to anticipate our future growth, our business may be adversely affected. As we change and expand
our business, we must also expand and adapt our operational infrastructure. Our business relies on
data systems, billing systems, and financial reporting and control systems, among others. All of these
systems have become increasingly complex in the recent past due to the growing complexity of our
business, acquisitions of new businesses with different systems, and increased regulation over
controls and procedures. To manage our business in a cost-effective manner, we will need to
continue to upgrade and improve our data systems, billing systems, and other operational and
financial systems, procedures, and controls. In some cases, we are outsourcing administrative
functions to lower-cost providers. These upgrades, improvements and outsourcing changes will
require a dedication of resources and in some cases are likely to be complex. If we are unable to
adapt our systems and put adequate controls in place in a timely manner, our business may be
adversely affected. In particular, sustained failures of our billing systems to accommodate increasing
numbers of transactions, to accurately bill users and advertisers, or to accurately compensate
Affiliates could adversely affect the viability of our business model.
We have dedicated resources to provide a variety of premium enhancements to our products,
services and apps, which might not prove to be successful in generating significant revenue for us.
We offer fee-based enhancements for many of our free services. The development cycles for these
technologies are long and generally require investment by us. We have invested and will continue to
invest in premium products, services and apps. Some of these premium products, services and apps
might not generate anticipated revenue or might not meet anticipated user adoption rates. We have
previously discontinued some non-profitable premium services and may discontinue others. General
economic conditions as well as the rapidly evolving competitive landscape may affect users’
willingness to pay for such premium services. If we cannot generate revenue from our premium
services that are greater than the cost of providing such services, our operating results could be
harmed.
We may have exposure to additional tax liabilities which could negatively impact our income tax
provision, net income, and cash flow.
We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which
we currently operate or have historically operated. The determination of our worldwide provision for
income taxes and current and deferred tax assets and liabilities requires judgment and estimation.
Our income taxes could be adversely affected by earnings being lower than anticipated in
jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have
higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by
changes in tax laws, regulations, or accounting principles.
In the ordinary course of our business, there are many transactions and calculations where the
ultimate tax determination is uncertain. As a U.S. multinational corporation, we are subject to
changing tax laws both within and outside of the U.S. We cannot predict the form or timing of
potential legislative changes, but any newly enacted tax law could have a material adverse impact on
our tax expense and cash flow. For example, several jurisdictions have sought to increase revenues
by imposing new taxes on internet advertising or increasing general business taxes.
We earn a material amount of our income from outside the U.S. As of December 31, 2014, we had
undistributed foreign earnings of approximately $2.9 billion, principally related to our equity method
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