Earthlink 2004 Annual Report Download - page 23

Our ability to operate our business efficiently depends on these systems, and if we are unable to modify or develop new systems to support our
growth initiatives, our business will be adversely affected.
Declining levels of economic activity or fluctuations in the use of the Internet could negatively impact our subscriber growth rates and
incremental revenue levels .
Changes in general economic conditions that affect demand for the Internet could adversely affect our revenues. While the number of
Internet users has been rising, the Internet infrastructure may not expand fast enough to meet the increased levels of demand. If use of the
Internet as a medium for commerce declines or grows at a slower rate than we anticipate, our revenues could be lower than expected and our
business could be harmed.
We may be unable to hire and retain sufficient qualified personnel, and the loss of any of our key executive officers could adversely affect
us.
We believe that our success will depend in large part on our ability to attract and retain highly skilled, knowledgeable, sophisticated and
qualified managerial, professional and technical personnel. We have experienced significant competition in attracting and retaining personnel
who possess the skills that we are seeking. As a result of this competition, we may experience a shortage of qualified personnel. In addition, the
loss of any of our key executives could have a material adverse effect on us.
Provisions in our certificate of incorporation, bylaws and other elements of our capital structure could limit our share price and delay a
change of management.
Our certificate of incorporation, bylaws and shareholder rights plan contain provisions that could make it more difficult or even prevent a
third party from acquiring us without the approval of our incumbent board of directors. These provisions, among other things:
• divide the board of directors into three classes, with members of each class to be elected in staggered three-year terms;
• limit the right of stockholders to call special meetings of stockholders; and
• authorize the board of directors to issue preferred stock in one or more series without any action on the part of stockholders.
These provisions could limit the price that investors might be willing to pay in the future for shares of our common stock and significantly
impede the ability of the holders of our common stock to change management. In addition, we have adopted a rights plan, which has anti-
takeover effects. The rights plan, if triggered, will cause substantial dilution to a person or group that attempts to acquire our common stock on
terms not approved by the board of directors. Provisions and agreements that inhibit or discourage takeover attempts could reduce the market
value of our common stock.
Our stock price has been volatile historically and may continue to be volatile.
The trading price of our common stock has been and may continue to be subject to wide fluctuations. Our stock price may fluctuate in
response to a number of events and factors, such as quarterly variations in operating results; announcements of technological innovations or
new products by us or our competitors; changes in financial estimates and recommendations by securities analysts; the operating and stock
price performance of other companies that investors may deem comparable to us; and news reports relating to trends in our markets or general
economic conditions.
In addition, the stock market in general and the market prices for Internet-related companies in particular, have experienced volatility that
often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect
the price of our stock, regardless of our operating performance. Additionally, volatility or a lack of positive performance in our
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