Earthlink 2010 Annual Report Download - page 27

Table of Contents
• the integration of departments, operating support systems, such as billing systems, and technologies, such as network equipment;
•
the need to implement and maintain uniform controls, procedures and policies throughout all of our acquired companies or the
need to remediate significant control deficiencies that may exist at acquired companies; and
• potential unknown liabilities.
We may not realize anticipated synergies, cost savings, growth opportunities and operational efficiencies from our acquisitions, or the
anticipated benefits may take longer or present greater cost to realize than expected. The occurrence of any of these risks could have a material
adverse effect on our business, results of operations, financial condition or cash flows.
We expect to continue to evaluate and consider potential strategic transactions that we believe may complement our business. At any given
time, we may be engaged in discussions or
negotiations with respect to one or more of such transactions that may be material to our financial
condition and results of operations. There can be no assurance that any such discussions or negotiations will result in the consummation of any
transaction, or that we will identify appropriate transactions on terms acceptable to us. Future acquisitions may result in significant costs and
expenses and charges to earnings, including those related to severance pay, employee benefit costs, asset impairment charges, charges from the
elimination of duplicative facilities and contracts, legal, accounting and financial advisory fees, and payments to executive officers and key
employees under retention plans. Additionally, future acquisitions may result in the dilutive issuances of equity securities, use of our cash
resources, incurrence of debt or contingent liabilities, amortization expense related to acquired definite-
lived intangible assets or the potential
impairment of amounts capitalized as intangible assets, including goodwill. Any of these items could have a material adverse affect on our
business, financial condition, results of operations and cash flows.
We also may experience risks relating to the challenges and costs of closing a transaction and the risk that an announced transaction may
not close, including our pending acquisition of One Communications. Completion of certain acquisition transactions are conditioned upon,
among other things, the receipt of approvals, including from the FCC and certain state public utilities commissions. Failure to complete a
pending transaction would prevent us from realizing the anticipated benefits. We would also remain liable for significant transaction costs,
including legal and accounting fees, whether or not the transaction is completed. In addition, the current market price of our common stock may
reflect a market assumption as to whether the transaction will occur. Consequently, the completion of, or a failure to complete, a transaction
could result in a significant change in the market price of our common stock.
The continuing effects of adverse economic conditions could harm our business.
Unfavorable general economic conditions, including recession and disruptions to the credit and financial markets, could negatively affect
our business. Our consumer access services are discretionary and dependent upon levels of consumer spending. In addition, our business
customers are particularly exposed to a weak economy. These conditions could adversely affect the affordability of, and customer demand for,
some of our products and services and could cause customers to delay or forgo purchases of our products and services. Also, our business
customers may not be able to obtain adequate access to credit, which could affect their ability to make timely payments to us. One or more of
these circumstances could cause our revenues to decline, churn to increase, allowance for doubtful accounts and write-
offs of accounts
receivable to increase or otherwise have a material adverse effect on our business, financial position, results of operations and cash flows.
Additionally, our business is dependent on third-
party vendors for services and network equipment integral to our business, some of which
are experiencing financial distress. If these vendors encounter or continue to encounter financial difficulties, their ability to supply services and
network equipment to us
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