Expedia 2005 Annual Report Download - page 23

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Our results of operations are difficult to predict and may fluctuate substantially from the estimates
of securities analysts or expectations of our investors.
In the event that our operating results fall below the expectations of securities analysts or investors,
the trading price of our securities may decline significantly. In addition to the risks identified herein, our
business is sensitive to general economic conditions, the health of the worldwide travel industry, consumer
confidence, consumer retail spending, trends in technology, competition, levels of personal discretionary
income, weather, acts of war or terrorism, safety concerns and acts of God. Our business is also subject to
the effects of seasonality with revenue typically lowest in the first quarter of the year and highest in the
third quarter.
We have a limited operating history and our stock price is highly volatile.
We have a relatively short operating history as a separate company and a rapidly evolving and
unpredictable business model. The trading price of our common stock fluctuates significantly. Trading
prices of our common stock may fluctuate in response to a number of events and factors, such as:
‚ quarterly variations in operating results;
‚ changes in interest rates;
‚ conditions or trends in the online travel and e-commerce industries;
‚ fluctuations in the stock market in general and market prices for internet-related companies in
particular;
‚ general economic conditions;
‚ new services, innovations, and strategic developments by our competitors or us, or business
combinations and investments by our competitors or us;
‚ changes in financial estimates by us or securities analysts and recommendations by securities
analysts;
‚ changes in internet regulation;
‚ additions or departures of key personnel;
‚ corporate restructurings, including layoffs or closures of facilities;
‚ changes in the valuation methodology of, or performance by, other companies in the travel or
e-commerce industries; and
‚ transactions in our common stock by major investors and certain analyst reports, news, and
speculation.
Any of these events may cause our stock price to rise or fall and may adversely affect our business
and financing opportunities. A a result, we may experience extreme price and volume fluctuations that are
unrelated or disproportionate to changes in our operating performance. In the past, following periods of
volatility in the general market, or a particular companies securities, securities class actions have been
brought against affected companies. This litigation, if instituted against us, could result in substantial costs
and diversion of our management's attention and resources.
Future volatility in our stock price could force us to increase our cash compensation to employees or
grant larger stock awards than we have historically, which could hurt our operating results or reduce the
percentage ownership of our existing stockholders, or both.
We may not be able to engage in desirable strategic transactions and equity issuances due to our
tax-sharing arrangements.
Our ability to engage in significant stock transactions could be limited or restricted to preserve the tax
free nature of our Spin-Off from IAC. Current federal income tax law creates a presumption that the
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