Earthlink 2004 Annual Report Download - page 22

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share of the earnings (losses) of SK-EarthLink in our statements of operations, which would adversely affect our earnings and earnings per
share.
We continue to evaluate investment opportunities and may make investments in the future in companies that offer products and services
that are complementary to our offerings and in companies that allow us to vertically integrate our business. The value of each of our
investments is subject to general economic, technological and market trends, as well as to the operating and financial decisions of each
company’s management team, all of which are outside of our control. In addition, these companies may not gain the expected number of
customers and/or generate the expected level of revenues, and consequently, these companies may require additional funding, any of which
could diminish the value of or dilute our investment. Our current and future investments in other companies, including our expected investment
in the SK-
EarthLink joint venture, may not provide the economic returns we are seeking and may lose value, which would materially adversely
affect our financial position, results of operations and liquidity.
We utilize third-party providers for technical and customer support, and our business may suffer if our partners are unable to provide these
services, cannot expand to meet our needs or terminate their relationships with us.
Our business and financial results depend, in part, on the availability and quality of our customer support services. We outsource a
majority of our technical and customer support functions. As a result, we maintain only a small number of internal customer service and
technical support personnel. We are not currently equipped to provide the necessary range of customer service functions in the event that our
service providers become unable or unwilling to offer these services to us. Our outsourced contact center service providers utilize several
geographically dispersed locations to provide us with technical and customer support services, and as a result, our contact center service
providers may become subject to financial and political risks beyond our or the providers’ control which could jeopardize their ability to
deliver customer support services. If one or more of our service providers does not provide us with quality services, or if our relationship with
any of our outsourced customer and technical support service providers terminates and we are unable to provide those services internally or
identify a replacement vendor in an orderly, cost-effective and timely manner, our business, financial position and results of operations would
suffer.
If we are unable to successfully defend against legal actions, we could face substantial liabilities.
We are currently a party to various legal actions, including class actions. Defending against these lawsuits may involve significant expense
and diversion of management’
s attention and resources from other matters. Due to the inherent uncertainties of litigation, we may not prevail in
these actions. In addition, our ongoing operations may subject us to litigation risks and costs in the future. Both the costs of defending lawsuits
and any settlements or judgments against us could materially and adversely affect our operating expenses and liquidity.
Our business depends on the continued development of effective business support systems, processes and personnel.
In recent years, we have expanded our service offerings and will endeavor to expand further by offering new products and services to
maintain and increase our customer base. Our current and planned personnel, systems, procedures and controls may not be adequate to support
and effectively manage our growth initiatives which would strain our management, operational and financial resources. Consequently, we may
not be able to hire, train, retain, motivate and manage required personnel and develop, implement, and manage adequate systems, procedures
and controls to support new products and services, which may limit our growth potential and adversely affect our business.
Additionally, our business relies on our financial reporting and data systems, including our billing systems, which have grown
increasingly complex due to the diversification and complexity of our business.
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