Classmates.com 2006 Annual Report Download - page 18

• risks of entering markets in which we have little or no direct prior experience;
•
lack of controls, policies and procedures appropriate for a public company, and the time and cost related to the remediation of such
controls, policies and procedures;
•
potential impairment of relationships with employees, users or vendors as a result of changes in management; and
•
potential dilutive issuances of equity, large write-offs either at the time of the acquisition or in the future, the incurrence of restructuring
charges, the incurrence of debt, the amortization of identifiable intangible assets, and the impairment of amounts capitalized as intangible
assets.
We may seek to expand our international business through acquisitions. Acquisitions of foreign businesses involve risks in addition to those
mentioned above, including risks associated with potentially unfamiliar economic, political and regulatory environments and integration
difficulties due to language, cultural and geographic differences. We cannot assure you that any further acquisitions we make will be successful.
We may not successfully develop and market new services in a timely or cost-
effective manner; consumers or advertisers may not accept
our new products and services.
We may not be able to compete effectively if we are not able to adapt to changes in technology and industry standards or develop or acquire
and successfully commercialize new and enhanced services. Services, such as our broadband services, may be dependent on our obtaining
needed technology or services from third parties, which we may not be able to obtain in a timely manner upon terms acceptable to us, or at all.
Our ability to compete successfully will also depend upon the continued compatibility of our services with products offered by various vendors,
which we may not be able to achieve. We have expended, and may in the future expend, significant resources enhancing our existing services
and developing, acquiring and implementing new services, such as our broadband services. Product development involves a number of
uncertainties, including unanticipated delays and expenses. New or enhanced services may have technological problems or may not be accepted
by consumers or advertisers. For example, our VoIP services did not meet with commercial success. We cannot assure you that we will be
successful in developing, acquiring or implementing new or enhanced services, or that new or enhanced services will be commercially
successful.
Our access business is dependent on our ability to effectively manage our telecommunications and network capacities.
Our access business substantially depends on the capacity, affordability, reliability and security of our telecommunications networks. We
will have to accurately anticipate our future telecommunications capacity needs within lead-time requirements. Only a small number of
telecommunications providers offer the network and data services we currently require, and we purchase most of our telecommunications
services from a few providers. Some of our telecommunications services are provided pursuant to short-term agreements that the providers can
terminate or elect not to renew. Vendors may experience significant financial difficulties and be unable to perform satisfactorily or to continue to
offer their services. The loss of vendors has resulted, and may result, in increased costs, decreased service quality and the loss of users. If we are
unable to maintain, renew or obtain new agreements with the third party providers of our telecommunications services, or to secure new or
alternative arrangements with other providers, to provide the scope, quantity, quality, type and pricing of services to meet our current and future
needs, our business, financial position, results of operations and cash flows could be materially and adversely affected.
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