Yahoo 2014 Annual Report Download - page 36

investment in Alibaba Group on our consolidated balance sheet as an available-for-sale marketable
security. Consequently, the carrying value of this investment on our consolidated balance sheet will
vary over time and fluctuations in its valuation may cause our stock price to fluctuate.
In addition, the stock market in general, and the market prices for companies in our industry, have
experienced volatility that often has been unrelated to operating performance. These broad market
and industry fluctuations may adversely affect the price of our stock, regardless of our operating
performance. A decrease in the market price of our common stock would likely adversely impact the
trading price of the 0.00% Convertible Senior Notes due 2018 that we issued in November 2013 (the
“Notes”). Volatility or a lack of positive performance in our stock price may also adversely affect our
ability to retain key employees who have been granted stock options or other stock-based awards. A
sustained decline in our stock price and market capitalization could lead to an impairment charge to
our long-lived assets.
Delaware statutes and certain provisions in our charter documents could make it more difficult for a
third-party to acquire us.
Our Board has the authority to issue up to 10 million shares of preferred stock and to determine the
price, rights, preferences, privileges and restrictions, including voting rights, of those shares without
any further vote or action by the stockholders. The rights of the holders of our common stock may be
subject to, and may be adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future. The issuance of preferred stock may have the effect of delaying,
deterring or preventing a change in control of Yahoo without further action by the stockholders and
may adversely affect the voting and other rights of the holders of our common stock.
Some provisions of our charter documents, including provisions eliminating the ability of
stockholders to take action by written consent and limiting the ability of stockholders to raise
matters at a meeting of stockholders without giving advance notice, may have the effect of delaying
or preventing changes in control or changes in our management, which could have an adverse effect
on the market price of our stock and the value of the $1.4375 billion aggregate principal amount of
the Notes we issued in November 2013. In addition, our charter documents do not permit cumulative
voting, which may make it more difficult for a third-party to gain control of our Board. Further, we are
subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law,
which will prohibit us from engaging in a “business combination” with an “interested stockholder” for
a period of three years after the date of the transaction in which the person became an interested
stockholder, even if such combination is favored by a majority of stockholders, unless the business
combination is approved in a prescribed manner. The application of Section 203 also could have the
effect of delaying or preventing a change in control of us.
Any of these provisions could, under certain circumstances, depress the market price of our common
stock and the Notes.
Risks Relating to the Notes
The conditional conversion feature of the Notes, if triggered, may adversely affect our financial
condition and operating results.
In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be
entitled to convert the Notes at any time during specified periods at their option. If one or more
holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering
solely shares of our common stock (other than paying cash in lieu of delivering any fractional share),
we would be required to settle a portion or all of our conversion obligation through the payment of
cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert
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