Classmates.com 2006 Annual Report Download - page 19

Our business is highly dependent on our billing and customer support systems, and on third parties for technical support and customer
service, and our business may suffer if these systems do not function and we cannot perform and provide these services.
Customer billing and service are highly complex processes, and our systems must efficiently interface with other third parties’
systems such
as the systems of credit card processing companies and other companies to whom we outsource these functions. Our ability to accurately and
efficiently bill and service our users is dependent on the successful operation of these systems. We have experienced customer billing and
service problems from time to time and may experience additional problems in the future. We currently outsource a majority of the live technical
and billing support functions. As a result, we maintain only a small number of internal customer service personnel. We are not equipped to
provide the necessary range of customer service functions in the event that our vendors become unable or unwilling to offer these services to us.
Problems with our third party software applications, our internally developed software applications, our credit card processors, our outsourced
customer service vendors, other customer billing and support vendors, and any other failures or errors in our customer billing and service
systems, could materially and adversely affect our business, financial position, results of operations and cash flows.
If our software or hardware contains errors or fails, if we fail to operate our services effectively or if we encounter difficulties
integrating our systems and technologies, our business could be seriously harmed.
Our services, and the hardware and software systems underlying our services, are complex. Our systems may contain undetected errors or
failures and are susceptible to human error. We have in the past encountered, and may in the future encounter, software and hardware errors,
system design errors, errors in the operation of our systems, and technical and customer support issues associated with our services and software
releases. This has resulted in, and may in the future result in, a number of adverse consequences, which have included or may include:
•
users being disconnected from our services or being unable to access our services;
• loss of data or revenue;
•
injury to reputation; and
• diversion of development resources.
A number of our material technologies and systems are based on different platforms. To the extent we attempt to integrate these
technologies and systems, we may experience a number of difficulties, errors, failures and unanticipated costs. In addition, our business relies on
third-party software for various applications including, without limitation, our internal operations, our billing and customer support, our
accelerated services, and our advertising products and services. Any significant failure of this software could materially and adversely affect our
business, financial position, results of operations and cash flows. Our services also rely on their compatibility with other third-party systems,
particularly operating systems. Incompatibility with future changes to third-party software upon which our systems rely could materially affect
our ability to deliver our services. We cannot assure you that we will not experience significant technical problems with our services in the
future.
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