4 easy accounting questions and a comfortable due date. Sorry I can't offer any more tutor credit. Thanks in advance! :-)

Question 1: A few years ago, a publishing company in the fourth quarter had a net profit figure that exceeded sales for that quarter. Such a situation as this suggests that some difficult accounting issues are involved in interim reporting. a. What is \"interim reporting\"? a. What are the major accounting problems related to interim reports? a. What problem exists with income taxes in interim reports and how does GAAP recommend that taxes be reported? What does GAAP require? Question 2: Cola Corporation issued its financial statements for the year ended December 31, 2014, on February 25, 2015. The following events took place early in 2015. On January 29, the company purchased 50,000 shares of its $1 par value common stock for $23per share. On February 15, Cola determined after negotiations with the other party in a lawsuit that Cola should pay $500,000. At December 31, 2014, a litigation liability was had been recorded for $200,000. a. What is meant by \"post-balance-sheet events\"? a. Describe the two different types of post-balance sheet events. a. Indicate what needs to be done for the two transactions stated above. If any journal entries need to be prepared, do so in proper form with explanations and computations. Question 3: Hazard Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2015. A Sales revenue Cost of goods sold Operating expenses Total expenses Operating profit/(loss) Identifiable assets B C $340,000 $120,000 195,000 95,000 60,000 50,000 255,000 145,000 65,000 85,000 (25,000) 15,000 126,000 30,000 D E $80,000 $20,000 $490,000 30,000 8,000 300,000 35,000 6,000 110,000 14,000 410,000 6,000 80,000 $52,000 5,000 389,000 Sales of segments A and C included intersegment sales of $45,000 and $76,000, respectively. Required: Show all computations. a) Determine which of the segments are reportable based on the: (1) Revenue test. (2) Operating profit (loss) test. (3) Identifiable assets test. b) Explain the guidelines for determining the minimum number of operating segments to be shown. Then determine if enough operating segments have been separately reported upon. Question 4: The Form 10-K for Yahoo! Inc. as of and for the year ended December 31, 2013 is posted under APP8 on myCourses. Use it to answer the following questions in complete sentences restating the question. a. b. c. d. What is the footnote number in which the Summary of Significant Accounting Policies\" is provided? What does that footnote state the company's mission is driven by? What is the footnote number in which \"Transactions with Related Parties\" is provided? What does that footnote state about the effect of related party transactions on revenue? What is the footnote number in which Segment information is provided? What are the names of the segments on which the company reports? What is the footnote number in which Subsequent Events are reported? What does that footnote state was the subsequent event? YAHOO 2013 ANNUAL REPORT YAHOO 2013 ANNUAL REPORT \"2013 was a year of tremendous progress at Yahoo.\" INCREASE IN AVERAGE MONTHLY USERS average monthly users YAHOO WEATHER APP 800M+ NEW MAIL EXPERIENCE EDITORIAL EXCELLENCE SEARCH YAHOO ON THE ROAD 50% TOP TECH TALENT Enhancing Search YAHOO IN NYC TALENT 340,000+ Job Applications YAHOO SPORTS NEW LOGO Nearly half of new hires had design, engineering, or product backgrounds YAHOO NEWS DIGEST yahoo2013.tumblr.com MONTHLY MOBILE USERS monthly mobile users 400M+ TUMBLR ACQUISITION TO OUR SHAREHOLDERS 2013 was a year of tremendous progress at Yahoo. Our mission at Yahoo is to make the world's daily habits more inspiring and entertaining. From Search, Communications, Digital Magazines and Video to Flickr and Tumblr, daily habits are our heritage and our inspiration. We re-imagined every core product to create more engaging, delightful experiences for our users across the globe. We also invested in our ad technology to build value for our advertising partners. 2013 was also a year of remarkable innovation at Yahoo. We continued to rethink and rework the Search user experience. We are investing in Mailthe ultimate daily habitto keep users connected with friends and family. We are focused on bringing users the best content from across the Web, through our partnerships with Comedy Central, SNL, NBC Sports, ABC News, CBS's The Insider and others. We are also investing in editorial excellence, bringing top talent from news and journalism on board. Tumblr, the Web's platform for curators and creators alike, joined Yahoo in May. The Yahoo Weather app made the otherwise mundane task of checking the weather beautiful and inspiring, with curated Flickr photos. Yahoo News Digest, powered by Summly technology, captures the day's most important news in summary form with algorithmically produced and editorially curated stories. Flickr users can now access nearly unlimited storageone terabyte, free of chargeenough to capture an entire lifetime of photos. 2013 was a year of growth at Yahoo. After years of decline, we saw global trafc increases across the Yahoo network. In July 2013, for the rst time in our history, we surpassed 400 million monthly users on mobile. As we innovate and build new products, mobile user growth will remain an integral part of our growth strategy. For Yahoo, mobile takes the things that we've always excelled atMail, Search, Finance, Newsand puts them directly in users' pockets, making them truly daily habits. The fourth quarter of 2013 also marked our eighth consecutive quarter of year-over-year growth in Search revenue ex-TAC. 2013 was also an exciting year for our shareholders. During 2013, we returned approximately $3.3 billion to shareholders through stock repurchases. Our stock price increased by more than 100 percent from $19.90 on December 31, 2012 to $40.44 on December 31, 2013. Ultimately, 2013 was a success because of the tremendous people at Yahoo. We remain committed to making Yahoo the absolute best place to work. In 2013, we continued to build our management team, hire the best people and invest in Yahoos to position the Company for long-term growth. We saw a record number of applicants, a testament to our commitment to innovation and excellence. We also focused on removing barriers to execution so that every Yahoo can focus on delighting and entertaining our users with the best products and the best experiences on the Web. We are forever grateful for your belief in our vision. Your continued support allows us to do what we love mostmake the world's daily habits more inspiring and entertaining. Yahoo's future is bright, and we look forward to sharing this future with you. David Filo Co-Founder & Chief Yahoo Marissa A. Mayer CEO, President & Director UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-28018 Yahoo! Inc. (Exact name of Registrant as specified in its charter) Delaware 77-0398689 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 701 First Avenue Sunnyvale, California 94089 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (408) 349-3300 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common stock, $.001 par value The NASDAQ Stock Market LLC (NASDAQ Global Select Market) Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes Yes ' No ' No Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ' Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No ' Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ' Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of \"large accelerated filer,\" \"accelerated filer,\" and \"smaller reporting company\" in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer ' (Do not check if a smaller reporting company) Accelerated filer ' Smaller reporting company ' Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ' No As of June 28, 2013, the last business day of the Registrant's most recently completed second fiscal quarter, the aggregate market value of voting stock held by non-affiliates of the Registrant, based upon the closing sales price for the Registrant's common stock, as reported on the NASDAQ Global Select Market was $21,982,938,411. Shares of common stock held by each officer and director and by each person who owns 10 percent or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purpose. The number of shares of the Registrant's common stock outstanding as of February 14, 2014 was 1,009,392,339. DOCUMENTS INCORPORATED BY REFERENCE The following documents (or parts thereof) are incorporated by reference into the following parts of this Form 10-K: Proxy Statement for the 2014 Annual Meeting of ShareholdersPart III Items 10, 11, 12, 13, and 14. YAHOO! INC. Form 10-K Fiscal Year Ended December 31, 2013 INDEX ITEM ITEM 1 ITEM 1A ITEM 1B ITEM 2 ITEM 3 ITEM 4 Page PART I Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 7A Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 9A Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITEM 9B Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 13 30 31 31 31 ITEM 5 ITEM 10 ITEM 11 ITEM 12 ITEM 13 ITEM 14 ITEM 15 PART III Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART IV Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 35 37 69 73 133 133 133 134 134 134 134 134 135 136 The trademarks and/or registered trademarks of Yahoo! Inc. and its subsidiaries referred to herein include, but are not limited to, Yahoo!, Y!, Flickr, Tumblr, Xobni, Aviate, Yahoo Finance, Summly, Right Media, Yahoo Celebrity, Shine, Mojito, Stamped, Rivals, Yahoo BOSS, interclick and their respective logos. Other names are trademarks and/or registered trademarks of their respective owners. 2 Part I Item 1. Business OVERVIEW Yahoo! Inc., together with its consolidated subsidiaries (\"Yahoo,\" the \"Company,\" \"we,\" or \"us\") is a global technology company focused on making the world's daily habits inspiring and entertaining. Our mission is driven by our commitment to creating highly personalized experiences that reach our users wherever they might beon their mobile phone, tablet or desktop. Our more than 800 million monthly users connect to the things that matter most to them with beautiful, engaging experiences across Search, Communications, Digital Magazines and Videosome of which will be powered by Flickr and Tumblr. We create value for advertisers with a streamlined, simplified advertising technology stack that leverages Yahoo's data, reach and analytics to connect advertisers with their target audiences. For advertisers, the opportunity to be a part of users' daily habits across products and platforms is a powerful tool to engage audiences and build brand loyalty. Advertisers can build their businesses through advertising to targeted audiences on our online properties and services (\"Yahoo Properties\") and a distribution network of third party entities (\"Affiliates\") who integrate our advertising offerings into their Websites or other offerings (\"Affiliate sites\"; together with Yahoo Properties, the \"Yahoo Network\"). Our revenue is generated principally from display and search advertising. We are proud of our storied history that has evolved with the Internet, beginning in 1994 when our founders, Jerry Yang and David Filo, then graduate students at Stanford University, created Jerry and Dave's Guide to the World Wide Web, a simple directory of websites to help people navigate the Internet. Yahoo was incorporated in 1995 and is a Delaware corporation. We completed our initial public offering on April 12, 1996, and our stock is listed on the NASDAQ Global Select Market under the symbol \"YHOO.\" Yahoo is a global company headquartered in Sunnyvale, Californiawith offices in more than 30 countries, regions and territories. EXECUTIVE LEADERSHIP The management team reporting to Marissa Mayer, our Chief Executive Officer and President, is: David FiloCo-Founder & Chief Yahoo; Ken GoldmanChief Financial Officer; Ron BellGeneral Counsel & Secretary; Jacqueline ResesChief Development Officer; Kathy SavittChief Marketing Officer; Adam CahanSenior Vice President, Mobile & Emerging Products; Mike KernsSenior Vice President, Homepage & Verticals; Laurence MannSenior Vice President, Search Products; Jeffrey BonforteSenior Vice President, Communication Products; Scott BurkeSenior Vice President, Advertising and Data; Jay RossiterSenior Vice President, Platforms and Personalization Products; Ned BrodySenior Vice President, Americas; Dawn AireySenior Vice President, Europe, Middle East, and Africa; and Rose TsouSenior Vice President, Asia Pacific. 3 Our Board of Directors is composed of: Marissa Mayer, our CEO; Maynard Webb, our Chairman of the Board; John Hayes; Susan James; Max Levchin; Peter Liguori; and Thomas McInerney. 2013 BUSINESS HIGHLIGHTS: People, Products, Traffic & Revenue During 2013, we focused our attention on triggering a chain reaction of growth, which starts with hiring the best people who will build beautiful, engaging products. Those products drive increased traffic. The increased traffic generates greater advertiser interest, which ultimately results in revenue growth. Our focus on people, products, traffic and revenue in 2013 had measurable impacts on our business and opportunities for future growth as we outline below. We are committed to building our products focusing on mobile first. Today we have over 400 million monthly mobile users, an increase of more than 150 million users since we launched our new Mobile and Emerging Products team in October 2012. Today, mobile traffic represents more than half of our 800 million monthly users (and these numbers do not include Internet Message Access Protocol (\"IMAP\") or Tumblr users). Our growth in mobile traffic has been the result of an engaging and inspiring suite of new and revamped product experiences designed to make users' daily habits mobile. PEOPLE: During 2013, we have continued to invest in people, building out our management team and hiring exceptional talent from around the world. We made hiring a priority and focused on recruiting the best talent company-wide by implementing a more rigorous hiring process. We focused on filling several key leadership positions and addressing critical product needs. We hired Ned Brody as Senior Vice President, Americas, Dawn Airey as Senior Vice President, Europe, Middle East, and Africa, and Sandy Gould as the Senior Vice President of Talent Acquisition and Development. We also brought on several leaders to strengthen our Digital Magazines. We hired New York Times journalist and editor Megan Liberman as Editor-in-Chief for Yahoo News and Katie Couric as the Global Anchor in January 2014. We made hiring a priority and focused on attracting the best talent to Yahoo. Over the year, we received more than 340,000 applications to work at Yahoo, nearly double the number we received in 2012. We also accelerated our efforts towards hiring technical talent to bring excellence to our core products. Nearly half of our hires were technical talent. In 2013, we continued to work on several key initiatives that were launched in 2012 in an effort to enhance our culture and make Yahoo the best place to work by enhancing transparency, promoting accountability and improving employee efficiency. Some of these efforts include quarterly performance reviews for all employees; aggressive quarterly and annual goals for the company, for teams, and for individuals; and weekly all-hands meetings to communicate transparently and accountably on the most important events facing the Company. PRODUCTS: In 2013, we accelerated the pace of innovation, launching nearly a dozen new product experiences to strengthen and expand our core products. These investments furthered our mission to make users' daily habits more inspiring and entertaining through beautiful, intuitive, and innovative products. SEARCH: For Yahoo, Search remains one of our biggest areas of focus, and in 2013 we enhanced Search to create a better, more user-centered experience. O We introduced several new ad formats on Search in Q3 2013, helping to further optimize and monetize Search queries. O We acquired Aviate in Q4 2013 whose technology and talent will be critical to the future of Search especially contextual mobile search. Factoring context into our Search offering opens up tremendous opportunities to better answer users' Search queries and make their daily habits easier. 4 COMMUNICATIONS: In addition to Search, people come to Yahoo every day to communicate with their friends and family. We know how important email is to our users and so we continue to innovate our approach to everyday communications. O We refreshed Yahoo Mail, and followed up with multiple iterations to continue improving the experience for our users. O Additionally, we introduced threaded conversations, easier ways to reply to emails, and beautiful, photographic themesall resulting in improved ease of use and a much more modern email experience. O In Q3 2013, we acquired Xobni as part of our continued efforts to deliver the best mail experience across all screens. With a strong reputation for building smart products that organize your inbox, this technology is helping us deliver a more personalized, more thoughtful and more precise mail experience making communicating easier for our users. DIGITAL MAGAZINES: In addition to Search and Communications, content has always been a key part of Yahoo's business, and was a focus of our investments in 2013. Digital Magazines, which align with our verticals, bring users personalized, engaging content curated from across the web. O We launched a new Yahoo Finance, our industry-leading business and financial news product, across desktop, mobile web and mobile app. O Yahoo Sports was also upgraded, putting stats, highlights and footage of your favorite teams at your fingertips. O In Q1 2013, we announced the acquisition of Summly, a company that helps simplify the way we provide informationmaking it faster, more precise and easier to read. The technology was wrapped into our Yahoo App in less than a month, bringing users a new, improved way to consume content. VIDEO: Video has also become an increasingly important aspect of our content offerings. We continued to focus on enhancing the user experience and developing partnerships to bring users the best video content from across the web. O In September, we launched Yahoo Screen, our video experience across mobile and desktop. Screen seeks to bring users the absolute best contentincluding comedy, news, and live sports and concertsfrom across the web. O We continue to offer premium content through our partnerships with ABC News and NBC Sports. O Comedy has found a home at Yahoo with the introduction of the Saturday Night Live (\"SNL\") clip archive and clips from Viacom's Comedy Central and MTV shows, including The Daily Show with Jon Stewart, The Colbert Report, and more. We also introduced eight original web series this past fall. FLICKR: With more than 10 billion photos, Flickr continues to be one of the world's most comprehensive photo platforms and a continued focus of innovation for Yahoo. O In Q2 2013, we successfully launched a reimagined and industry-leading Flickr photo solution for mobile. O To improve the product's functionality we added camera filtering and editing features to iOS devices in Q3 2013 and debuted in Apple's share sheet in iOS7, making uploading much easier. O Flickr photo books, a web embed player, new auto-tagging and social features were all added in Q4 2013, rounding out a year of investing in Flickr. TUMBLR: Tumblr's popularity and engagement among creators, curators and audiences of all ages brings a significant community of users to our network. TRAFFIC: In 2013, we saw several positive traffic trends. By the end of the year, Yahoo had more than 800 million monthly users, with more than 400 million of them joining us on mobile. These numbers do not include IMAP or Tumblr users. 5 REVENUE: While we are focused on creating the absolute best experiences for our users, we are also committed to delivering value to our advertisers and publishers. In 2013, we invested in our ad technology to continue strengthening this commitment. We announced a global, non-exclusive agreement with Google to display ads on various Yahoo Properties and certain co-branded sites using Google's AdSense for Content and AdMob services. By adding Google to our list of world-class contextual ad partners, we can serve ads that are even more meaningful and personalized to our users. We introduced two new advertising formats designed to enhance the content experience in a more intuitive and immersive way. O Yahoo Stream Ads offer unobtrusive native ads that are part of a user's Yahoo news stream. O Billboard Ads on Yahoo.com were designed to deliver richer content interactions to users and increased effectiveness to advertisers. We continue to generate business opportunities through streamlined advertising seamlessly integrated with the content experience. In Q3 2013, Yahoo expanded Yahoo Stream Ads across Mail and mobile content properties. OUR BUSINESS USER OFFERINGS We are focused on building beautiful products that make the world's daily habits inspiring and entertaining. With hundreds of Search partners, a world-class mail platform, three industry-leading verticals (News, Sports and Finance), a growing video content offering, the photo resources of Flickr and the social reach of Tumblr, we play an important role in the digital lives of our more than 800 million monthly users on Yahoo Properties. Our user offerings include: SEARCH Yahoo Search serves as a starting point to navigate the Internet and discover information that matters to users, offering rich search results ranked and organized based on their relevance to the query. Our Search continues to evolve to help users find the right information at the right time through web Search. Under our Search and Advertising Services and Sales Agreement (\"Search Agreement\") with Microsoft Corporation (\"Microsoft\"), Microsoft is the exclusive algorithmic and paid search advertising services provider on Yahoo Properties and non-exclusive provider of such services on Affiliates sites. Yahoo continues to develop and launch features around the results to enhance the search experience for our users. These features include rich results, contextual search results, site filters, related topic suggestions and more. Yahoo Answers enables users to seek, discover and share knowledge and opinions across mobile phones, tablets and desktop. COMMUNICATIONS Yahoo Mail connects users to the people and things that are most important to them across mobile phones, tablets and desktop. In addition to mail, we offer users integrated contacts, calendar and messaging products, all outfitted with one terabyte of storage and beautiful photo themes. 6 Yahoo Messenger is an instant messaging service that provides an interactive and personalized way for users to connect, communicate and share experiences on a real-time basis. Similar to mail, we connect users across mobile phones, tablets and desktop. Yahoo Groups allows users to join groups based on shared interests and involvements, providing access to messages, event calendars, polls and other shared information. DIGITAL MAGAZINES Yahoo.com brings together the most relevant contentincluding Yahoo original content and partner content curated from across the Web. Our homepage is optimized across mobile phones, tablets and desktop. In addition, users can see a preview of their mailbox, local weather, stock quotes, sports scores, comics, and more. On our content properties, we generate revenue from display and search advertising, as well as from feebased services. Many of our properties are also available in mobile-optimized versions for display on mobile phones and tablet devices, or available as native applications across different operating platforms for iOS, Android and Windows phones. My Yahoo is a customizable homepage that gives registered users the ability to create, configure and easily modify their custom page with news and information from around the Web. It is a starting point for mobile users to bring relevant and personalized content from across the Web and other Yahoo Properties to users' devices. Yahoo Weather provides users with real-time weather conditions and information for their favorite cities and locations and is available on desktop, tablets and mobile phones. Yahoo News provides original, premium, partner, and syndicated news via text, photos, and video to engage users with wide-ranging, up-to-the-minute coverage and analysis into topical news events. In addition, we have a number of key content partnerships in place, including a strategic partnership with ABC News and the Good Morning America brand. Yahoo Sports serves one of the largest audiences of digital sports enthusiasts in the world. Yahoo Sports is anchored by Fantasy Sports, editorial reporting, real-time scores, statistics and breaking news, coverage of the biggest global sports events, and premium college sports coverage through our Rivals publisher network. With award-winning writers, a leading fantasy platform and live game tracking, Yahoo Sports delivers experiences for every fan, every day. During 2013, we also released several new products and innovations, including: A redesign of Yahoo Sports to include greater content personalization, and a more visual interface to provide up-to-the-minute news, scores, statistics, and Fantasy updates for fans. A rebuilt Yahoo Sports mobile application and mobile website, which brings fans scores, statistics and playby-play for their favorite teams. New mobile app experiences for Fantasy Football, Baseball, Basketball and Hockey featuring live drafting features for the first time on Yahoo Sports mobile. Yahoo Finance provides a comprehensive set of financial data, information, and tools that help users make informed financial decisions. Yahoo Finance features a robust content offering that is a mix of original editorial and syndicated news via relationships with several third-party providers and is available on mobile phones, tablets and desktop. Yahoo Entertainment and Lifestyles is a collection of properties focused on emerging trends and information in popular culture, women's issues, and media. Yahoo Celebrity, Movies, TV and Music are leading destinations for celebrity gossip, movie, music, and TV premieres, and awards coverage. Yahoo Shine is targeted to women and provides tips, features and in-depth analysis in areas such as well-being, food, fashion, relationships and parenting. 7 VIDEO We provide original, premium and third-party news, finance, sports, entertainment, and lifestyle video content distributed in contextually relevant experiences across Yahoo Properties. Yahoo Screen is a video destination site where videos from across Yahoo Properties are aggregated and watched. In 2013, we launched a brand new experience on Yahoo Screen for desktop computers and mobile web that lets users easily flip through channels of their favorite contentjust like TV. We also launched applications on new platforms including iPhone, iPad, and Apple TV, and added new partners including SNL and Viacom. Yahoo Smart TV is a software platform that enhances television through engaging interactive experiences. Yahoo Smart TV is accessible on certain televisions of major manufacturers including Samsung and VIZIO. We generate revenue from this offering through advertising and an application store. FLICKR Flickr is a web and mobile photo management and sharing service that makes it easy for users to upload, store, organize, and share their photos. Flickr offers all members one terabyte of free storage. Members also have the ability to purchase printed books of their photos. TUMBLR Tumblr offers a web service and mobile applications (particularly on the iOS and Android platforms) that allow users to create and share content of all kindsincluding images, video, audio, and text, and to follow their interests and passions in the Tumblr Dashboard stream. Tumblr's primary form of monetization is native brand advertising within the Tumblr Dashboard. In addition, Tumblr generates revenue by enabling a marketplace for the sale of third-party developed blog themes and licensing its real-time feed of user-generated posts. At the end of 2013, Tumblr was home to nearly 150 million blogs and over 65 billion posts, reaching an audience of hundreds of millions of people worldwide each month. ADVERTISER OFFERINGS As one of the Web's largest publishers and the owner of leading properties across multiple content categories, Yahoo provides a canvas of personalized content and experiences where advertisers can connect with users in a meaningful way. Advertisers seek partners that can address their business objectives, from high-impact branding campaigns that generate awareness among consumers to tactical campaigns that drive specific audiences to action. We have aligned our resources and developed a new, unified approach to digital advertising across search, native, audience, premium display, and video advertising. These products are supported by Yahoo's platform, data and analytical tools, with insights into the daily digital habits of more than 800 million people worldwide. Search Advertising: The Yahoo Bing Network connects advertisers with an audience of hundreds of millions of users, with the support of strategic account teams, reporting, analytics, and extensive campaign controls. Yahoo continues to focus on developing new search ad formats to engage users across devices, including personalized search retargeting, click-to-call functionality in search ads, sitelink extensions, location extensions, product ads and more. Native Advertising provides brand new ways for advertisers to engage their audience across devices on Yahoo's network of leading consumer products. Yahoo's native advertising offerings include Yahoo Stream Ads (served within content streams across our media properties and in Mail); Yahoo Image Ads (HD-quality image-rich ads served within native image environments and slideshows); and Tumblr Sponsored Postsall powered by the Yahoo Advertising platform. Because native ads are a seamless part of a user's experience, they can help deliver higher impact for advertisers. 8 Yahoo Audience Ads allow advertisers to buy display, video and mobile ads targeted to specific audiences. Yahoo Audience Ads deliver the right messages to the right users across Yahoo and other high-quality sites with the scale and targeting precision of real-time programmatic buying. Yahoo Audience Ads offer optimized, datadriven ad buying with enhanced analytics. Advertisers have access to a comprehensive set of audience data, combining Yahoo data with advertiser data and third-party data, all usable on an extended pool of high-quality inventory. Yahoo Premium Ads offer the largest digital advertising canvas for brand and performance advertisers on the web. We offer high-impact advertising opportunities on the Yahoo Homepage; Yahoo's leading vertical content properties; Yahoo Mail; program sponsorships of major events; and premium video placementsall with custom integrations, personalization and targeting that unite advertisers' brands with consumers' digital daily habits. Yahoo Video is a premium video advertising platform anchored by Yahoo's award-winning original programming and world-class partner content. Yahoo Video connects brands to their target audience at scale through a complete set of advertising opportunities including video channels, video programs, audience targeting, branded entertainment, live events, and ad placements that occur before, during and after a video rolls. A SIMPLIFIED AD PLATFORM Yahoo Ad Manager is a simplified ad platform that gives advertisers direct, hands-on access to Yahoo's advertising products. Yahoo Stream Ads, Yahoo Image Ads and Tumblr Sponsored Posts powered by Yahoo Advertising are available through Yahoo Ad Manager, with a simple user interface that helps advertisers get ads online in a matter of minutes, with insights and analytics built in. Yahoo Ad Manager Plus is an extension of Yahoo Ad Manager for larger advertisers to plan, execute and optimize complex display ad campaigns directly, giving them greater control over the performance of their ads on Yahoo and third-party programmatic inventory. Yahoo offers managed services through Yahoo Ad Manager Plus for advertisers who want custom audience definition, richer campaign measurement and insights, access to exclusive inventory, varied pricing options, and full-service campaign optimization. Yahoo Ad Exchange enables advertisers to easily target global audiences across Yahoo Properties, Affiliate sites and other publisher sites on mobile and the Web. Enhanced campaign measurement tools and insights are provided to optimize audience targeting and ad formats and placements as a means of increasing return on advertiser ad spend. PUBLISHER OFFERINGS We work with high-quality publishers to attract new audiences and create engaging experiences across the Web. We monetize these experiences with a set of application programming interfaces (\"APIs\") and tools to grow partner businesses. With these offerings, publishers are able to participate in the Yahoo Search and Bing Unified Search Marketplaces as well as the Yahoo Ad Exchange for display advertising. PRODUCT DEVELOPMENT Yahoo continually launches, improves, and scales products and features to meet evolving user, advertiser, and publisher needs. Most of our software products and features are developed internally by our employees. 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. 9 Yahoo's product teams include a broad array of engineering and product talent and support a large portion of the Yahoo product portfolio and technology infrastructure. Our product teams have expertise in consumer applications (Web/Mobile), scalable software platforms, information retrieval, machine learning and science, editorial, networking/communications technologies, and presentation layer frameworks. Our engineering and production teams are primarily located in our Sunnyvale, California, headquarters, Bangalore, India, and Beijing, China. Product development expenses for 2011, 2012, and 2013 totaled approximately $919 million, $886 million, and $1 billion, respectively, which included stock-based compensation expense of $81 million, $74 million, and $83 million, respectively. M&A ACTIVITY As part of our overall strategy, we focused on acquisitions in 2013 that help us achieve three different goals. The first is to grow our technical talent base. Our acquisition of Stamped is a good example of this, where the team came to Yahoo and focused on building the Yahoo Screen mobile experience which launched in Q3 2013. Second, is to enhance our technology and core products offerings. Our 2013 acquisition of Summly is an example where we acquired the summarization technology that was initially incorporated in our Yahoo App last Spring and continued with the launch of Yahoo News Digest in Q1 2014. Third, is to expand audience and engagement. Our acquisition of Tumblr in Q2 2013 is an example where we gained access to an engaged community of younger users that complemented our core audience. We expect to make additional acquisitions and strategic investments in the future. 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 and New Zealand, China, 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 maintain three primary channels for selling our advertising services: field, mid-market, and reseller/small business. Our field advertising sales team sells display advertising in all markets and search advertising to premium advertisers under the Search Agreement with Microsoft. Our mid-market channel sells our services to medium-sized businesses, while our reseller/small business channel enables us to sell advertising services to additional regional and small business advertisers. In 2013, we reorganized our U.S. sales force from a regional structure to a vertical structure providing one, customer-centric solution to our customers. We believe that this will allow us to provide the best solutions across all of our products based on a deeper understanding of our customers' businesses. 10 In the U.S., we employ sales professionals in multiple locations, including Atlanta, Boston, Burbank, Chicago, Dallas, Detroit, Hillsboro, Los Angeles, Miami, New York, Omaha, San Francisco, and Sunnyvale. In international markets, we either have our own internal sales professionals or rely on our established sales agency relationships in more than 50 countries, regions, and territories. No individual customer represented more than 10 percent of our revenue in 2011, 2012, or 2013. Revenue under the Search Agreement represented approximately 20 percent, 25 percent, and 31 percent of our revenue for the years ended December 31, 2011, 2012 and, 2013, respectively. Internet usage is subject to seasonal fluctuations, typically declining during customary summer vacation periods and increasing during the fourth quarter holiday period due to higher online retail activity. These seasonal patterns have affected, and we expect will continue to affect, our business and quarterly sequential revenue growth rates. MARKETING Yahoo is one of the most recognized brands in the world. Our products, services, and content enable us to attract, retain, and engage users, advertisers, and publishers. Our marketing teams engage in each step of the development, deployment, and management of products and services, and in content design. Our marketing team will help shape our offerings to better market them to our potential and existing users. COMPETITION We face significant competition from online media companies, social media and networking sites, traditional print and broadcast media, search engines, and various e-commerce sites. Our competitors include Google, Facebook, Microsoft, and AOL. Several of our competitors offer an integrated variety of Internet products, advertising services, technologies, online services and/or content in a manner similar to us that compete for the attention of our users, advertisers, and publishers. We also compete with these companies to obtain agreements with third parties to promote or distribute our services. In addition, we compete with social media and networking sites which are attracting an increasing share of users, users' online time and online advertising dollars. We compete with advertising networks, exchanges, demand side platforms and other platforms, such as Google AdSense, DoubleClick Ad Exchange, AOL's Ad.com and Microsoft Media Network, as well as traditional media companies for a share of advertisers' marketing budgets and in the development of the tools and systems for managing and optimizing advertising campaigns. In a number of international markets, especially those in Asia, Europe, the Middle East and Latin America, we face substantial competition from local Internet service providers and other portals that offer search, communications, and other commercial services and often have a competitive advantage due to dominant market share in their territories, greater local brand recognition, focus on a single market, familiarity with local tastes and preferences, or greater regulatory and operational flexibility. Yahoo's competitive advantage centers on the fact that we make people's daily digital habits more entertaining this includes daily activities like communicating, searching, reading and sharing information. We believe our principal competitive strengths include the usefulness, accessibility, integration, and personalization of the online services that we offer; the quality, personalization, and presentation of our search results; and the overall user experience on our leading premium content properties and other Yahoo Properties. Our principal competitive strengths relating to attracting advertisers and publishers are the reach, effectiveness, and efficiency of our marketing services as well as the creativity of the marketing solutions that we offer. \"Reach\" is the size of the audience and/or demographic that can be accessed through the Yahoo Network. \"Effectiveness\" for advertisers is the achievement of marketing objectives, which we support by developing campaigns, measuring the 11 performance of these campaigns against their objectives, and optimizing their objectives across the Yahoo Network. \"Effectiveness\" for publishers is the monetization of their online audiences. \"Efficiency\" is the simplicity and ease of use of the services we offer advertisers and publishers. Additional information regarding competition is included in Part I, Item 1A \"Risk Factors\" of this Annual Report on Form 10-K and is incorporated herein by reference. INTELLECTUAL PROPERTY We create, own, and maintain a wide array of intellectual property assets that we believe are among our most valuable assets. Our intellectual property assets include patents and patent applications related to our innovations, products and services; trademarks related to our brands, products and services; copyrights in software and creative content; trade secrets; and other intellectual property rights and licenses of various kinds. We seek to protect our intellectual property assets through patents, copyrights, trade secrets, trademarks and laws of the U.S. and other countries, and through contractual provisions. We enter into confidentiality and invention assignment agreements with our employees and contractors, and utilize non-disclosure agreements with third parties with whom we conduct business in order to secure and protect our proprietary rights and to limit access to, and disclosure of, our proprietary information. We consider the Yahoo! trademark and our many related company brands to be among our most valuable assets, and we have registered these trademarks in the U.S. and other countries throughout the world and actively seek to protect them. We have licensed in the past, and expect that we may license in the future, certain of our technology and proprietary rights, such as trademark, patent, copyright, and trade secret rights, to third parties. Additional information regarding certain risks related to our intellectual property is included in Part I, Item 1A \"Risk Factors\" of this Annual Report on Form 10-K and is incorporated herein by reference. EMPLOYEES As of December 31, 2013, we had approximately 12,200 full-time employees and fixed term contractors. Our future success is substantially dependent on the performance of our senior management and key technical personnel, as well as our continuing ability to attract, maintain the caliber of, and retain highly qualified technical, executive, and managerial personnel. Additional information regarding certain risks related to our employees is included in Part I, Item 1A \"Risk Factors\" of this Annual Report on Form 10-K and is incorporated herein by reference. AVAILABLE INFORMATION Our Website is located at http://www.yahoo.com. Our investor relations Website is located at http://investor.yahoo.net. We make available free of charge on our investor relations Website under \"Financial Info\" our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (\"SEC\"). The SEC maintains a Website that contains reports, proxy and information statements, and other information regarding our filings at http://www.sec.gov. 12 Item 1A. Risk Factors We face significant competition for users, advertisers, publishers, developers, and distributors. We face significant competition from online media companies, social media and networking sites, traditional print and broadcast media, search engines, and various e-commerce sites. In a number of international markets, especially those in Asia, Europe, the Middle East and Latin America, we face substantial competition from local Internet service providers and other portals that offer search, communications, and other commercial services. Several of our competitors offer an integrated variety of Internet products, advertising services, technologies, online services and content in a manner similar to Yahoo. We compete against these and other companies to attract and retain users, advertisers, developers, and third-party Website publishers as participants in our Affiliate network, and to obtain agreements with third parties to promote or distribute our services. We also compete with social media and networking sites which are increasingly used to communicate and share information, and which are attracting a substantial and increasing share of users, users' online time, and online advertising dollars. A key element of our strategy is focusing on mobile products and mobile advertising formats, as well as increasing our revenue from mobile. A number of our competitors have devoted significant resources to the development of products and services for mobile devices. Currently our revenue from mobile is not material and our competitors have mobile revenue significantly greater than ours. If we are unable to develop products for mobile devices that users find engaging and that help us grow our mobile revenue, our competitive position, our financial condition and operating results could be harmed. In addition, a number of competitors offer products and services that directly compete for users with our offerings, including e-mail, search, sports, news and finance. Similarly, the advertising networks operated by our competitors or by other participants in the display marketplace offer advertising exchanges, ad networks, demand side platforms, ad serving technologies, sponsored search offerings, and other services that directly compete for advertisers with our offerings. We also compete with traditional print and broadcast media companies to attract domestic and international advertising spending. Some of our existing competitors and possible entrants may have greater brand recognition for certain products and services, more expertise in particular market segments, and greater operational, strategic, technological, financial, personnel, or other resources than we do. Many of our competitors have access to considerable financial and technical resources with which to compete aggressively, including by funding future growth and expansion and investing in acquisitions, technologies, and research and development. Further, emerging start-ups may be able to innovate and provide new products and services faster than we can. In addition, competitors may consolidate or collaborate with each other, and new competitors may enter the market. Some of our competitors in international markets have a substantial competitive advantage over us because they have dominant market share in their territories, have greater local brand recognition, are focused on a single market, are more familiar with local tastes and preferences, or have greater regulatory and operational flexibility due to the fact that we may be subject to both U.S. and foreign regulatory requirements. If our competitors are more successful than we are in developing and deploying compelling products or in attracting and retaining users, advertisers, publishers, developers, or distributors, our revenue and growth rates could decline. We generate the majority of our revenue from display and search advertising, and the reduction in spending by or loss of current or potential advertisers would cause our revenue and operating results to decline. For the twelve months ended December 31, 2013, 79 percent of our total revenue came from display and search advertising. Our ability to retain and grow display and search revenue depends upon: maintaining and growing our user base and popularity as an Internet destination site; maintaining the popularity of our existing products and introducing engaging new products and making our new and existing products popular and distributable on mobile and other alternative devices and platforms; 13 maintaining and expanding our advertiser base on PCs and mobile devices; broadening our relationships with advertisers to small- and medium-sized businesses; successfully implementing changes and improvements to our advertising management platforms and obtaining the acceptance of our advertising management platforms by advertisers, Website publishers, and online advertising networks; successfully acquiring, investing in, and implementing new technologies and strategic partnerships; successfully implementing changes in our sales force, sales development teams, and sales strategy; continuing to innovate and improve the monetization capabilities of our display advertising and mobile products; effectively monetizing mobile and other search queries; continuing to innovate and improve users' search experiences; maintaining and expanding our Affiliate program for search and display advertising services; and deriving better demographic and other information about our users to enable us to offer better experiences to both our users and advertisers. In most cases, our agreements with advertisers have a term of one year or less, and may be terminated at any time by the advertiser or by us. Search marketing agreements often have payments dependent upon usage or clickthrough levels. Accordingly, it is difficult to forecast display and search revenue accurately. In addition, our expense levels are based in part on expectations of future revenue, including occasional guaranteed minimum payments to our Affiliates in connection with search and/or display advertising, and are fixed over the short-term in some categories. The state of the global economy, growth rate of the online advertising market, and availability of capital has impacted and could further impact the advertising spending patterns of our existing and potential advertisers. Any reduction in spending by, or loss of, existing or potential advertisers would negatively impact our revenue and operating results. Further, we may be unable to adjust our expenses and capital expenditures quickly enough to compensate for any unexpected revenue shortfall. If we do not manage our operating expenses effectively, our profitability could decline. We plan to continue to manage costs to better and more efficiently manage our business. However, our operating expenses might increase as we expand our operations in areas of desired growth, continue to develop and extend the Yahoo brand, fund product development, build or expand data centers, acquire additional office space, and continue to make talent acquisitions and to acquire and integrate complementary businesses and technologies. If our expenses increase at a greater pace than our revenue, or if we fail to effectively manage costs, our profitability will decline. If we are unable to provide innovative search experiences and other products and services that generate significant traffic to our Websites, our business could be harmed, causing our revenue to decline. Internet search is characterized by rapidly changing technology, significant competition, evolving industry standards, and frequent product and service enhancements. Even though we have substantially completed the transition to Microsoft's platform, we still need to continue to invest and innovate to improve our users' search experience to continue to attract, retain, and expand our user base and paid search advertiser base. We also need to continue to invest in and innovate on the mobile search experience. We also generate revenue through other online products and services, such as Yahoo Mail, and continue to innovate the products and services that we offer. The research and development of new, technologically advanced products is a complex process that requires significant levels of innovation and investment, as well as 14 accurate anticipation of technology, market and consumer trends. If we are unable to provide innovative products and services which generate significant traffic to our Websites, our business could be harmed, causing our revenue to decline. Risks associated with our Search Agreement with Microsoft may adversely affect our business and operating results. Under our Search Agreement with Microsoft, Microsoft is the exclusive algorithmic and paid search services provider on Yahoo Properties and non-exclusive provider of such services on Affiliate sites for the transitioned markets. Approximately 31 percent, 25 percent, and 20 percent of our revenue for 2013, 2012 and 2011, 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. Implementation of our Search Agreement with Microsoft commenced on February 23, 2010. We have completed the transition of our algorithmic search platform to the Microsoft platform and have substantially completed transition of paid search. In September 2013, the Company advised Microsoft that we were delaying the transition of paid search in Taiwan and Hong Kong. Microsoft disagreed with the delay and the parties engaged in litigation regarding the transition of these markets. The transition of paid search in Taiwan and Hong Kong was completed in December 2013; however, Microsoft could seek recovery of its costs and damages. Under the Search Agreement, Microsoft initially agreed to guarantee Yahoo's revenue per search (\"RPS Guarantee\") on Yahoo Properties for 18 months after the transition of paid search services to Microsoft's platform in each market based on the difference in revenue per search between the pre-transition and posttransition periods and certain other factors. Paid search services in the U.S. and Canada transitioned to Microsoft's platform in the fourth quarter of 2010, other markets followed as described above. To date, there has been a gap in revenue per search between pre-transition and post-transition periods in most markets and the payments under the RPS Guarantee were intended to compensate for the difference. In the fourth quarter of 2011, Microsoft agreed to extend the RPS Guarantee in the U.S. and Canada through March 2013, and in the second quarter of 2013 Microsoft extended the RPS Guarantee in the U.S. through March 2014. In June 2013, Microsoft and Yahoo agreed upon the RPS Guarantee payment amounts to be paid to us for the quarters ended December 31, 2012, March 31, 2013 and June 30, 2013. We also agreed to fixed quarterly payments in lieu of the RPS Guarantee in the U.S. for the quarters ending September 30, 2013, December 31, 2013 and March 31, 2014. In addition, we agreed to waive our right to receive any future RPS Guarantee payments in all markets except Taiwan and Hong Kong. To the extent the fixed quarterly payments and any RPS Guarantee payments we receive from Microsoft do not fully offset any shortfall relating to revenue per search in the transitioned markets or any shortfall continues after the expiration of the fixed quarterly payments and RPS Guarantee payments, our search revenue and profitability would decline. Notwithstanding the fixed quarterly payments or any RPS Guarantee payments we may receive from Microsoft, our competitors may continue to increase revenue, profitability, and market share at a higher rate than we do. As mobile advertising continues to evolve and people increasingly access our products via mobile devices rather than PCs, our financial results may be adversely impacted if our mobile offerings are not widely adopted by users, advertisers and device manufacturers or if we do not generate adequate revenue from our mobile offerings. The number of people who access the Internet through mobile devices rather than a PC, including mobile telephones, smartphones and tablets, is increasing and will likely continue to increase dramatically. Approximately half of our monthly users are now joining us on mobile. In addition, search queries are increasingly being undertaken through mobile devices. We expect our ability to grow advertising revenue will become increasingly dependent on our ability to generate revenue from ads displayed on mobile devices. 15 A key element of our strategy is focusing on mobile devices and we expect to continue to devote significant resources to the creation and support of developing new and innovative mobile products and services. However, if our new mobile products and services, including new forms of Internet advertising for mobile devices, are not more attractive and successful in attracting and retaining users, advertisers and device manufacturers than those of our competitors and fail to generate and grow revenue, our operating and financial results will be adversely impacted. To the extent that an access provider or device manufacturer enters into a distribution arrangement with one of our competitors, or as our competitors design, develop, or acquire control of alternative devices or their operating systems, we face an increased risk that our users will favor the services or properties of that competitor. We are dependent on the interoperability of our products and services with mobile operating systems we do not control. The manufacturer or access provider might promote a competitor's services or might impair users' access to our services by blocking access through their devices or by not making our services or apps available in a readilydiscoverable manner on their devices. If distributors impair access to or refuse to distribute our services or apps, then our user engagement and revenue could decline. If we are unable to license or acquire compelling content and services at reasonable cost or if we do not develop or commission compelling content of our own, the number of users of our services may not grow as anticipated, or may decline, or users' level of engagement with our services may decline, all or any of which could harm our operating results. Our future success depends in part on our ability to aggregate compelling content and deliver that content through our online properties. We license from third parties much of the content and services on our online properties, such as news items, stock quotes, weather reports, video, and maps. We believe that users will increasingly demand high-quality content and services. We may need to make substantial payments to third parties from whom we license or acquire such content or services. Our ability to maintain and build relationships with such third-pa