America Online 2010 Annual Report Download - page 23

Table of Contents
things, our financial condition and results of operations as well as the condition of the capital markets or other credit markets at the time we seek financing.
We currently do not have any ratings from the credit rating agencies, so our access to capital markets may be limited. We may not be able to obtain future
financing on terms acceptable to us in a timely manner, or at all. Our ability to fund our working capital, capital expenditure and financing requirements in the
future may be adversely affected if we are unable to obtain financing on acceptable terms. We terminated our 364-day $250.0 million senior secured revolving
credit facility (the "Revolving Credit Facility") during 2010 and our ability to access short-term borrowings from commercial banks could be at risk without
our Revolving Credit Facility. If we are unable to enter into the necessary financing arrangements or sufficient funds are not available on acceptable terms
when required, we may not have sufficient liquidity and our business may be adversely affected.
If we cannot make our content, products and services available and attractive to consumers via devices other than personal computers, our ability to
attract consumers and maintain or increase their engagement could be adversely affected.
Global consumers are increasingly accessing and using the Internet through devices other than personal computers, such as smartphones and tablet
computers. In order for consumers to access and use our content, products and services via these devices, we must ensure that our content, products and
services are compatible with such devices. We may also need to secure arrangements with device manufacturers and wireless carriers in order to have
placement on these devices. Even if we can secure placement of our products and services on the devices, our ability to generate revenues depends upon our
ability to negotiate favorable payment terms. If and as consumer pricing with the carriers changes or otherwise, AOL's ability to negotiate favorable payment
terms and its ability to earn revenues may be adversely impacted. We must also ensure that our licensing arrangements with third-party content providers
allow us to make this content available on these devices. These factors are also important with respect to AOL's ability to sell applications to consumers via
alternative devices, and thus to generate revenues other than subscription or advertising revenues.
Currently we offer applications directly to consumers for download from AOL Properties, the Apple Apps Store, or through other distribution channels.
We also offer certain applications, and access to its content, products and services by means of agreements with wireless carriers and device manufacturers.
To the extent that consumers are using our applications, content, products and services, we have opportunities to generate advertising revenues. However, the
amount of revenues, including advertising revenues earned from such arrangements is currently small. Also, business models in the marketplace seem to be
undergoing experimentation and rapid change. To the extent that we cannot generate consumer awareness and adoption of our applications, content, products
and services available on mobile devices, and cannot develop means of generating advertising revenues from consumer usage, our business could be adversely
impacted.
We rely on legacy technology infrastructure and a failure to update or replace this technology infrastructure could adversely affect our business.
Significant portions of our content, products and services are dependent on technology infrastructure that was developed a number of years ago. In
addition, we incur significant costs operating our business with multiple and often contradictory technology platforms and infrastructure. Updating and
replacing our technology infrastructure may be challenging to implement and manage, may take time to test and deploy, may cause us to incur substantial
costs and may cause us to suffer data loss or delays or interruptions in service. These delays or interruptions in service may cause our consumers, advertisers
and publishers to become dissatisfied with our offerings and could adversely affect our business.
Our dependence on legacy technology infrastructure may also put us in a weaker position relative to a number of our key web services competitors.
Competitors with newer technology infrastructure may have greater flexibility and be in a position to respond more quickly than us to new opportunities,
which could impact our competitive position in certain markets and adversely affect our business.
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