Amazon.com 2004 Annual Report Download - page 24

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steps we take to protect our intellectual property will adequately protect our rights or that others will not
independently develop or otherwise acquire equivalent or superior technology or other intellectual property
rights.
Third parties that license our proprietary rights may take actions that diminish the value of our proprietary
rights or reputation. In addition, the steps we take to protect our proprietary rights may not be adequate and third
parties may infringe or misappropriate our copyrights, trademarks, trade dress, patents, and similar proprietary
rights. Other parties may claim that we infringed their proprietary rights. We have been subject to, and expect to
continue to be subject to, claims and legal proceedings regarding alleged infringement by us of the patents,
trademarks, and other intellectual property rights of third parties. Such claims, whether or not meritorious, may
result in the expenditure of significant financial and managerial resources, injunctions against us or the
imposition of damages that we must pay. We may need to obtain licenses from third parties who allege that we
have infringed their rights, but such licenses may not be available on terms acceptable to us or at all. In addition,
we may not be able to obtain or utilize on terms that are favorable to us, or at all, licenses or other rights with
respect to intellectual property we do not own in providing e-commerce services to other businesses and
individuals under commercial agreements.
We Have a Limited Operating History and Our Stock Price Is Highly Volatile
We have a relatively short operating history and, as an e-commerce company, we have a rapidly evolving
and unpredictable business model. The trading price of our common stock fluctuates significantly. Trading prices
of our common stock may fluctuate in response to a number of events and factors, such as:
•general economic conditions;
•changes in interest rates;
•conditions or trends in the Internet and the e-commerce industry;
•fluctuations in the stock market in general and market prices for Internet-related companies in
particular;
•quarterly variations in operating results;
•new products, services, innovations, and strategic developments by our competitors or us, or business
combinations and investments by our competitors or us;
•changes in financial estimates by us or securities analysts and recommendations by securities analysts;
•changes in Internet regulation;
•changes in our capital structure, including issuance of additional debt or equity to the public;
•additions or departures of key personnel;
•corporate restructurings, including layoffs or closures of facilities;
•changes in the valuation methodology of, or performance by, other e-commerce companies; and
•transactions in our common stock by major investors and certain analyst reports, news, and speculation.
Any of these events may cause our stock price to rise or fall and may adversely affect our business and
financing opportunities.
Future volatility in our stock price could force us to increase our cash compensation to employees or grant
larger stock awards than we have historically, which could hurt our operating results or reduce the percentage
ownership of our existing stockholders, or both.
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