Classmates.com 2003 Annual Report Download - page 9

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that our marketing resources will be sufficient for us to continue to compete effectively with our major competitors.
Some providers of broadband services have decreased pricing to attract new users, particularly for introductory periods or in connection
with bundled services. The decline in the size of the dial-up market could accelerate significantly if broadband services become widely
available at lower prices or if there is significant consumer adoption of broadband applications, such as online video and music downloads,
which depend upon connections that provide significant bandwidth. In addition, several companies bundle broadband services with their cable
or phone services, which may result in lower prices of the broadband service to the consumer. We currently offer a broadband service in
Nashville and Indianapolis through Comcast Corporation's cable systems. The service, however, is not value
-
priced and we have had a minimal
number of subscribers sign up for it. We currently do not plan to offer broadband services on a significant scale, which will adversely impact
our ability to compete for new subscribers and to retain existing subscribers.
We expect competition for subscribers to continue to intensify and cannot assure you that we will be able to compete successfully. Our
inability to compete effectively could require us to make significant revisions to our strategies and business model and would likely result in
increased costs, decreased revenues and the loss of subscribers, all of which could materially and adversely impact our business, financial
condition, results of operations and cash flows.
Competition for Advertising Customers
We believe that the competitive factors determining success in the market for advertising customers include the size and demographic
profile of a user base, the ability to access efficiently a large number of potential advertisers, the ability to target users based on a variety of
criteria, pricing and geographic coverage. While we believe that we compete favorably with respect to many of these factors, several of our
competitors have an advantage over us with respect to specific factors, particularly size of user base and the ability to access efficiently a large
number of potential advertisers. We compete for revenues with major ISPs, content providers, large Web publishers, Web search engine and
portal companies, Internet advertising providers, content aggregation companies, and various other companies that facilitate Internet
advertising. Many of these companies have longer operating histories, greater name recognition, larger user bases and significantly greater
financial, technical and sales and marketing resources than we do. This may allow them to devote greater resources to the development,
promotion and sale of their products and services. These competitors may also engage in more extensive research and development, undertake
more far-reaching marketing campaigns and adopt more aggressive pricing policies. Historically, competition and a slowing of the growth of
online advertising have resulted in, and may continue to result in, reductions in the number of advertisers on our services, price reductions and
reductions in advertising revenues. We also compete with television, radio, cable and print media for a share of advertisers' total advertising
budgets.
Privacy Policy
We believe that issues relating to the privacy of Internet users and the use of personal information about these users are critically
important as commercial uses of the Internet grow. We have adopted and disclosed to our users a detailed policy outlining the permissible uses
of information about users and the extent to which such information may be shared with others. Our users must acknowledge and agree to this
policy when registering to use our services. We do not sell or license to third parties any personally identifiable information of users unless
they specifically authorize us to do so. However, we use information about our users to improve the quality of our services and the
effectiveness of advertising by our advertising customers.
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Employees
As of December 31, 2003, we had 499 employees, 336 of which were located in the United States and 163 of which were located in
Hyderabad, India. We had 284 employees in product development, including all employees located in our Hyderabad office, 87 employees in
general and administrative, 69 employees in sales and marketing, and 59 employees in network operations. None of these employees are
subject to a collective bargaining agreement, and we consider our relationships with employees to be good.
Web Availability of Reports
Our corporate Web site is www.untd.com. On this Web site, we make available, free of charge, our annual, quarterly and current reports,
changes in the stock ownership of our directors and executive officers, and other documents filed with, or furnished to, the SEC as soon as
reasonably practicable after such documents are filed with, or furnished to, the SEC.