Overstock.com 2010 Annual Report Download - page 38

Table of Contents
stock price. Investors should be aware that they could experience significant short-term volatility in our stock if such stockholders decide to sell all or a
portion of their holdings of our common stock at once or within a short period of time. In addition, the transfer of ownership of 50% or more of our
outstanding shares within a three year period could adversely affect our ability to use our net operating losses to offset future taxable net income.
Our quarterly operating results are volatile and may adversely affect the market price of our securities.
Our future revenues and operating results are likely to vary significantly from quarter to quarter due to a number of factors, many of which are outside
our control, and any of which could harm our business. As a result, we believe that quarterly comparisons of our operating results are not necessarily
meaningful and that you should not rely on the results of one quarter as an indication of our future performance. In addition to the other risk factors described
in this report, additional factors that have caused and/or could cause our quarterly operating results to fluctuate and in turn affect the market price of our
securities include:
increases in the cost of advertising;
our inability to retain existing customers or encourage repeat purchases;
the extent to which our existing and future marketing agreements are successful;
price competition that results in lower profit margins or losses;
the amount and timing of operating costs and capital expenditures relating to the expansion of our business operations and infrastructure;
the amount and timing of our purchases of inventory;
our inability to manage distribution operations or provide adequate levels of customer service;
increases in the cost of fuel and transportation;
our ability to successfully integrate operations and technologies from acquisitions or other business combinations;
offering new lines of products; and
our ability to attract users to our auctions, car listing and real estate sites.
Our operating results may fluctuate depending on the season, and such fluctuations may affect the market price of our securities.
We have experienced and expect to continue to experience fluctuations in our operating results because of seasonal fluctuations in traditional retail
patterns. Sales in the retail and wholesale industry tend to be significantly higher in the fourth calendar quarter of each year than in the preceding three
quarters due primarily to increased shopping activity during the holiday season. However, there can be no assurance that our sales in the fourth quarter will
exceed those of the preceding quarters or, if the fourth quarter sales do exceed those of the preceding quarters, that we will be able to manage the increased
sales effectively. Further, we generally increase our inventories substantially in anticipation of holiday season shopping activity, which has a negative effect
on our cash flow. Securities analysts and investors may inaccurately estimate the effects of seasonality on our results of operations in one or more future
quarters and, consequently, our operating results may fall below expectations, causing the market price of our securities to decline. We generally have
payment terms with our fulfillment partners that extend beyond the amount of time necessary to collect proceeds from our customers. As a result of holiday
sales, at December 31 of each year, our cash, cash equivalents, and marketable
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