Amazon.com 2007 Annual Report Download - page 22

The Loss of Key Senior Management Personnel Could Negatively Affect Our Business
We depend on our senior management and other key personnel, particularly Jeffrey P. Bezos, our President,
CEO, and Chairman. We do not have “key person” life insurance policies. The loss of any of our executive
officers or other key employees could harm our business.
System Interruption and the Lack of Integration and Redundancy in Our Systems May Affect Our Sales
Customer access to our websites and the speed with which a customer navigates and makes purchases on
our websites affect our net sales, operating results and the attractiveness of our products and services. We
experience occasional system interruptions and delays that make our websites unavailable or slow to respond and
prevent us from efficiently fulfilling orders or providing services to third parties, which may reduce our net sales
and the attractiveness of our products and services. If we are unable to continually add software and hardware,
effectively upgrade our systems and network infrastructure and take other steps to improve the efficiency of our
systems, it could cause system interruptions or delays and adversely affect our operating results.
Our computer and communications systems and operations could be damaged or interrupted by fire, flood,
power loss, telecommunications failure, earthquakes, acts of war or terrorism, acts of God, computer viruses,
physical or electronic break-ins, and similar events or disruptions. Any of these events could cause system
interruption, delays, and loss of critical data, and could prevent us from accepting and fulfilling customer orders
and providing services, which would make our product and service offerings less attractive. Our systems are not
fully redundant and our disaster recovery planning may not be sufficient. In addition, we may have inadequate
insurance coverage to compensate us for any related losses. Any of these events could damage our reputation and
be expensive to remedy.
We Have Significant Indebtedness
We have significant debt and may incur substantial additional debt in the future. A significant portion of our
future cash flow from operating activities may be dedicated to the payment of interest and the repayment of
principal on our indebtedness. There is no guarantee that we will be able to meet our debt service obligations. If
we are unable to generate sufficient cash flow or obtain funds for required payments, or if we fail to comply with
our debt covenants, we will be in default. In addition, we may not be able to refinance our debt on terms
acceptable to us, or at all. Our indebtedness could limit our ability to obtain additional financing for working
capital, capital expenditures, debt service requirements, acquisitions or other purposes in the future, as needed; to
plan for, or react to, changes in technology and in our business and competition; and to react in the event of an
economic downturn.
We Face Significant Inventory Risk
In addition to risks described elsewhere in this Item 1A relating to fulfillment center and inventory
optimization by us and third parties, we are exposed to significant inventory risks that may adversely effect our
operating results as a result of seasonality, new product launches, rapid changes in product cycles, changes in
consumer tastes with respect to our products and other factors. We must accurately predict these trends and avoid
overstocking or under-stocking products we manufacture and/or sell. Demand for products, however, can change
significantly between the time inventory or components are ordered and the date of sale. In addition, when we
begin selling or manufacturing a new product, it may be difficult to establish vendor relationships, determine
appropriate product or component selection, and accurately forecast demand. The acquisition of certain types of
inventory or components may require significant lead-time and prepayment and they may not be returnable. We
carry a broad selection and significant inventory levels of certain products, such as consumer electronics, and we
may be unable to sell products in sufficient quantities or during the relevant selling seasons. Any one of the
inventory risk factors set forth above may adversely affect our operating results.
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