Classmates.com 2007 Annual Report Download - page 27

customer billing and service problems from time to time and may experience additional problems in the future. We currently outsource a
majority of our live technical and billing support functions. We rely on one customer support vendor, and its call centers are located in the
Philippines and India. As a result, we maintain only a small number of internal customer support personnel. We are not equipped to provide the
necessary range of customer support functions in the event that our vendor becomes 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
support vendor, other customer billing and support vendors, and any other failures or errors in our customer billing and support 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 dial-up Internet access 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.
A security breach or inappropriate access to, or use of, our networks, computer systems or services could expose us to liability, claims or
a loss of revenue.
The success of our business depends on the security of our networks and, in part, on the security of the network infrastructures of our third-
party vendors. Unauthorized or inappropriate access to, or use of, our networks, computer systems or services could potentially jeopardize the
security of confidential information, including credit card information, of our users and of third-parties. Third-parties have in the past used our
networks, services and brand names to perpetrate crimes, such as identity theft or credit card theft, and may do so in the future. Users or third-
parties may assert claims of liability against us as a result of any failure by us to prevent security breaches, unauthorized disclosure of user
information or other such activities. Although we use security measures that we believe to be effective by industry standards, we cannot assure
you that the measures we take will be successfully implemented or will be effective in preventing these types of activities. We also cannot assure
you that the security measures of our third
-party network providers, providers of customer and
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