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Classmate

Submitted by seeker1 on July 5, 2008

Category: Technology
Words: 683 | Pages: 3
Views: 56
Popularity Rank: 111,690
Average Member Grade: N/A (Add a Comment / Grade this Paper)

Hoping for a big score - Classmates.com IPO
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www.Reunion.com/YearbookHigh School Yearbooks
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You may have heard Classmates.com, the website which is in direct competition with reunion.com is going public. Classmates is actually owned by United Online, which owns other businesses such as a French social networking website and loyalty rewards program.

Why you shouldn’t jump at this IPO
First, take a look at their SEC filing. If you are so inclined, find risk factors on page 11. Here are parts of what it says:

Failure to increase or maintain the number of paying subscribers for our social networking services would cause our business and financial results to suffer.

We may not be successful in increasing or maintaining the number of paying subscribers for our social networking services. Only a small percentage of members initially registering for our social networking services sign up for a paid subscription at the time of registration. As a result, our ability to generate subscription revenue is highly dependent on our ability to convince free members to return to our Web sites and become paying subscribers. The number of free members returning to our Web sites has decreased from time to time, and if we were to continue to experience such decreases, it would likely adversely impact our number of paying subscribers.

Even better, it continues:

If our social networking members do not interact with our Web sites, our business and financial results will suffer.

Our success is dependent upon our social networking members interacting with our Web sites. Currently, the network effect on our social networking Web sites is...

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