Yahoo 2015 Annual Report Download - page 19

and to manage our costs effectively. However, we are also investing in areas we believe will grow
revenue and our operating expenses might increase as a result of these investments. If our operating
expenses increase at a greater pace than our revenue grows, or if we fail to manage costs effectively,
our profitability could fail to improve and could decline.
There can be no assurance that our exploration of strategic alternatives will result in any transaction
being consummated, and speculation and uncertainty regarding the outcome of our exploration of
strategic alternatives may adversely impact our business.
In parallel with executing our strategic plan, we are exploring strategic alternatives, including
transactions to separate our remaining stake in Alibaba Group from our operating business focusing
on a reverse spin transaction, as well as exploring strategic proposals for the operating business. Our
Board has formed a Strategic Review Committee of independent directors to lead this process. There
can be no assurance that any transaction will be consummated, and the process of exploring
strategic alternatives will involve the dedication of significant resources and the incurrence of
significant costs and expenses. In addition, speculation and uncertainty regarding our exploration of
strategic alternatives may cause or result in:
• disruption of our business;
• distraction of our management and employees;
• difficulty in recruiting, hiring, motivating, and retaining talented and skilled personnel;
• difficulty in maintaining or negotiating and consummating new, business or strategic
relationships or transactions;
• increased stock price volatility; and
• increased costs and advisory fees.
If we are unable to mitigate these or other potential risks related to the uncertainty caused by our
exploration of strategic alternatives, it may disrupt our business or adversely impact our revenue,
operating results, and financial condition.
Risks associated with our Search Agreement with Microsoft may adversely affect our business and
operating results.
Under our Search Agreement with Microsoft, Microsoft was the exclusive provider of algorithmic and
paid search services for Yahoo Properties and Affiliate sites on personal computers and the non-
exclusive provider of such services on mobile devices. As of April 15, 2015, Microsoft became the non-
exclusive provider of such services on all devices. Commencing on May 1, 2015, the Company is
required to request paid search results from Microsoft for 51 percent of its search queries originating
from personal computers accessing Yahoo Properties and its Affiliate sites (the “Volume
Commitment”) and will display only Microsoft’s paid search results on such search result pages.
Approximately 35 percent, 35 percent, and 31 percent of our revenue for 2015, 2014 and 2013,
respectively, were attributable to the Search Agreement. Our business and operating results would
be adversely affected by a significant decline in or loss of this revenue if we are not able to
successfully replace this revenue with revenue from search results displayed through our Yahoo
Gemini platform or our Services Agreement with Google.
As a result of the Volume Commitment, we continue to be dependent on Microsoft continuing to
invest and innovate to maintain and improve its algorithmic and paid search services and to be
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