Stamps.com 2005 Annual Report Download - page 13

If we do not successfully attract and retain skilled personnel for permanent management and other key personnel positions, we may not be
able to effectively implement our business plan.
Our success depends largely on the skills, experience and performance of the members of our senior management and other key personnel.
Any of the individuals can terminate his or her employment with us at any time. If we lose key employees and are unable to replace them with
qualified individuals, our business and operating results could be seriously harmed. In addition, our future success will depend largely on our
ability to continue attracting and retaining highly skilled personnel. As a result, we may be unable to successfully attract, assimilate or retain
qualified personnel. Further, we may be unable to retain the employees we currently employ or attract additional qualified personnel to replace
those key employees that may depart. The failure to attract and retain the necessary personnel could seriously harm our business, financial
condition and results of operations.
The success of our business will depend upon the continued acceptance by customers of our service.
We must minimize the rate of loss of existing customers while adding new customers. Customers cancel their subscription to our service
for many reasons, including a perception that they do not use the service sufficiently that the costs for service are too high, because they are
going out of business, or other issues that are not satisfactorily resolved. We must continually add new customers both to replace customers
who cancel and to continue to grow our business beyond our current customer base. If too many of our customers cancel our service, or if we
are unable to attract new customers in numbers sufficient to grow our business, our operating results will be adversely affected. Further, if
excessive numbers of customers cancel our service, we may be required to incur significantly higher marketing expenditures than we currently
anticipate to replace these customers with new customers.
If we fail to effectively market and sell our services and products, our business will be substantially harmed and could fail.
In order to acquire customers and achieve widespread distribution and use of our services and products, we must develop and execute cost-
effective marketing campaigns and sales programs. We currently rely on a combination of marketing techniques to attract new customers
including direct mail, online marketing and business partnerships. We may be unable to continue marketing our services and products in a cost-
effective manner. If we fail to acquire customers in a cost-effective manner, our results of operations will be adversely affected.
If we fail to meet the demands of our customers, our business will be substantially harmed and could fail.
Our services and products must meet the commercial demands of our customers, which include home businesses, small businesses,
corporations and individuals. We cannot be sure that our services will appeal to or be adopted by an ever-growing range of customers.
If we are
unable to ship products such as items from our Supplies Store or PhotoStamps in a timely manner to our customers, our business may be
harmed.
Moreover, our ability to obtain and retain customers depends, in part, on our customer service capabilities. If we are unable at any time
to address customer service issues adequately or to provide a satisfactory customer experience for current or potential customers, our business
and reputation may be harmed. If we fail to meet the demands of our customers our results of operations will be adversely affected.
A failure to further develop and upgrade our services and products could adversely affect our business.
Any delays or failures in developing our services and products, including upgrades of current services and products, may have a harmful
impact on our results of operations. The need to extend our core technologies into new features and services and to anticipate or respond to
technological changes could affect our ability to develop these services and features. Delays in features or upgrade introductions could cause a
decline in our revenue, earnings or stock price. We cannot determine the ultimate effect these delays or the introduction of new features or
upgrades will have on our revenue or results of operations.
Third party assertions of violations of their intellectual property rights could adversely affect our business.
Substantial litigation regarding intellectual property rights exists in our industry. Third parties may currently have, or may eventually be
issued, patents upon which our products or technology infringe. Any of these third parties might make a claim of infringement against us. We
may become aware of, or we may increasingly receive correspondence claiming, potential infringement of other parties’ intellectual property
rights. We are currently a defendant in two such cases filed in the fourth quarter of 2004. We could incur significant costs and diversion of
management time and resources to defend claims against us regardless of their validity. Any associated costs and
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