Classmates.com 2007 Annual Report Download - page 25

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competing with one another and providing different types of advertising solutions, and our internal sales force competes with some or all of these
solutions for advertising dollars. We also compete with television, radio, print, and other offline sources for advertising dollars. Internet
advertising techniques are evolving, and if our technology and advertising serving techniques do not keep up with the needs of advertisers, we
will not be able to compete effectively. There can be no assurance our advertising initiatives will be effective or that we will successfully
compete with third-parties, and our advertising revenues may decline in future periods. Advertising inventory in our Communications segment
continues to decline as a result of the decrease in our pay accounts, and we anticipate decreased advertising revenues in the Communications
segment which will adversely impact our profitability.
Our business is subject to fluctuations.
Our results of operations and changes in the number and mix of pay accounts from period to period have varied in the past and may
fluctuate significantly in the future due to a variety of factors, many of which are outside of our control and difficult to predict. A number of
factors that may impact us are discussed in greater detail in this Annual Report on Form 10-K and in our other filings with the SEC, and these
factors may affect us from period to period and may affect our long-term performance. As a result, you should not rely on period-to-period
comparisons as an indication of future or long-term performance. In addition, these factors create difficulties with respect to our ability to
forecast our financial performance and business metrics accurately. We believe that these difficulties in forecasting present even greater
challenges for financial analysts who publish their own estimates of our future financial results and business metrics. We cannot assure you that
we will achieve the expectations or projections made by our management or by the financial analysts. In the event we do not achieve such
expectations or projections, our financial results and the price of our common stock could be adversely affected.
Our marketing activities may not be successful.
We spend significant funds to market our services and rely on a variety of channels to obtain new accounts. If our marketing activities or
our channels prove to be ineffective, or if the cost to acquire new accounts increases, our financial results could be materially and adversely
impacted.
We may be unsuccessful at acquiring additional businesses, services or technologies. Even if we complete an acquisition, it may not
improve our results of operations and may adversely impact our business and financial condition.
One of our strategic objectives is to acquire businesses, services or technologies that will provide us with an opportunity to diversify the
services we offer, leverage our assets and core competencies, expand our geographic reach or that otherwise may be complementary to our
existing businesses. We may not succeed in growing or maintaining our revenues unless we are able to successfully complete acquisitions. The
merger and acquisition market for companies offering Internet services is extremely competitive, particularly for companies who have
demonstrated a profitable business model with long-term growth potential. Companies with these characteristics trade publicly or are privately
valued at multiples of earnings, revenues, operating income, and other metrics significantly higher than the multiples at which we are currently
valued. Acquisitions may require us to obtain debt or equity financing, which may not be available to us on reasonable terms, or at all. In
addition, negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be
subject to approvals that are beyond our control. These and other factors may make it difficult for us to acquire additional businesses, services or
technologies at affordable prices, or at all, and there is no assurance that we will be successful in completing additional acquisitions.
We routinely engage in discussions regarding potential acquisitions and any of these transactions could be material to our financial
condition, results of operations and cash flows. However, we cannot
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