Stamps.com 2006 Annual Report Download - page 13

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Item 1A. Risk Factors
You should carefully consider the following risks and the other information in this Report and our other filings with the SEC before you
decide to invest in our company or to maintain or increase your investment. The risks and uncertainties described below are not the only ones
facing Stamps.com. Additional risks and uncertainties may also adversely impact and impair our business. If any of the following risks actually
occur, our business, results of operations or financial condition would likely suffer. In that case, the trading price of our common stock could
decline, and you may lose all or part of your investment.
This Report contains forward-looking statements based on the current expectations, assumptions, estimates and projections about
Stamps.com and the Internet. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from
those discussed in these forward-looking statements as a result of many factors, including those described in this section and elsewhere in this
Report. Stamps.com does not undertake to update publicly any forward
-looking statements for any reason, even if new information becomes
available or other events occur in the future.
Risks Related to Our Business
We may not successfully implement strategies to increase the adoption of our services and products which would limit our growth, adversely
affect our business and cause the price of our common stock to decline.
Our continuing profitability depends on our ability to successfully implement our strategy of increasing the adoption of our services and
products. Factors that might cause our revenues, margins and operating results to fluctuate include the factors described in the subheadings
below as well as:
•
The costs of our marketing programs to establish and promote the Stamps.com brands;
•
The demand for our services and products;
•
Our ability to develop and maintain strategic distribution relationships;
•
The number, timing and significance of new products or services introduced by us and by our competitors;
•
Our ability to develop, market and introduce new and enhanced products and services on a timely basis;
•
The level of service and price competition;
•
Our operating expenses;
•
U.S. Postal Service regulation and policies relating to PC Postage and PhotoStamps; and
•
General economic factors.
We implemented pricing plans that may adversely affect our future revenues and margins.
Our ability to generate gross margins depends upon the ability to generate significant revenues from a large base of active customers. In
order to attract customers in the future, we may run special promotions and offers such as free trials, discounts on fees, postage and supplies,
and other promotions. We cannot be sure that customers will be receptive to future fee structures and special promotions that we may
implement. Even though we have established a sizeable base of users, we still may not generate sufficient gross margins to remain profitable.
In addition, our ability to generate revenues or sustain profitability could be adversely affected by the special promotions or additional changes
to our pricing plans.
If we do not successfully attract and retain skilled personnel for permanent management and other key personnel positions, we may not be
able to effectively implement our business plan.
Our success depends largely on the skills, experience and performance of the members of our senior management and other key personnel.
Any of the individuals can terminate his or her employment with us at any time. If we lose key employees and are unable to replace them with
qualified individuals, our business and operating results could be seriously harmed. In addition, our future success will depend largely on our
ability to continue attracting and retaining highly skilled personnel. As a result, we may be unable to successfully attract, assimilate or retain
qualified personnel. Further, we may be unable to retain the employees we currently employ or attract
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