Yahoo 2015 Annual Report Download - page 13

In some instances, however, we might purchase technology and license intellectual property rights if
the opportunity is strategically aligned, operationally compatible, and economically advantageous.
While it may be necessary in the future to seek or renew licenses relating to various aspects of our
products, we believe based on past experience and industry practice that such licenses generally
could be obtained on commercially-reasonable terms. We believe our continuing innovation and
product development are not materially dependent upon any single license or other agreement with
a third-party relating to the development of our products.
Yahoo’s product teams, which include a broad array of engineering and product talent, support a
large portion of the Yahoo product portfolio and technology infrastructure. Our product teams have
expertise in web and mobile user applications, scalable software platforms, information retrieval,
machine learning and science, editorial, networking/communications technologies, and presentation
layer frameworks. We take security and privacy very seriously, and continuously innovate to protect
our users and their data.
Our engineering and production teams are primarily located in our Sunnyvale, California,
headquarters. Product development expenses for 2013, 2014, and 2015 totaled approximately $958
million, $1,156 million, and $1,178 million, respectively, which included stock-based compensation
expense of $83 million, $139 million, and $190 million, respectively.
M&A Activity
As part of our overall strategy, we evaluate and pursue potential acquisitions based on talent and
technology to help accelerate our growth in mobile, video, native, or social. In 2015, we completed 2
acquisitions, the purpose of which was to enhance our technology and core product offerings, grow
our talent base, and expand audience and engagement. We may make additional acquisitions and
strategic investments in the future that align with our growth strategy.
Global Operations
We manage our business geographically. The primary areas of measurement and decision-making are
Americas, EMEA (Europe, Middle East, and Africa), and Asia Pacific. Additional information required by
this item is incorporated herein by reference to Note 18—“Segments” of the Notes to our consolidated
financial statements, which appears in Part II, Item 8 of this Annual Report on Form 10-K.
We own a majority or 100 percent of all of these international operations (except in Australia, New
Zealand, and Japan where we have joint ventures and/or noncontrolling interests). We support these
businesses through a network of offices worldwide.
Revenue is primarily attributed to individual countries according to the international online property
that generated the revenue.
Information regarding risks involving our international operations is included in Part I, Item 1A “Risk
Factors” of this Annual Report on Form 10-K and is incorporated herein by reference.
Sales
We sell our advertising services through three primary channels: field, mid-market, and reseller/small
business. Our field advertising sales team sells display advertising in all markets and search
advertising to both premium and non-premium advertisers using Yahoo Gemini. Previously under the
Search Agreement, Yahoo had sales exclusivity for both the Company’s and Microsoft’s premium
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