1091171--2/25/2010--BLUE_NILE

related topics

{customer, product, revenue}

{system, service, information}

{product, market, service}

{stock, price, operating}

{acquisition, growth, future}

{property, intellectual, protect}

{tax, income, asset}

{operation, international, foreign}

{loan, real, estate}

{control, financial, internal}

{personnel, key, retain}

{regulation, change, law}

{competitive, industry, competition}

We expect our quarterly financial results to fluctuate, which may lead to volatility in our stock price. As a result of seasonal fluctuations in our net sales, our quarterly results may fluctuate and could be below expectations. We may not accurately forecast net sales and appropriately plan our expenses. Our failure to acquire quality diamonds and fine jewelry at commercially reasonable prices and lead times would result in higher costs and damage our operating results and competitive position. Our failure to meet customer expectations with respect to price would adversely affect our business and results of operations. Our net sales may be negatively affected if we are required to collect taxes on purchases. We may not succeed in continuing to establish the Blue Nile brand, which would prevent us from acquiring customers and increasing our net sales. We face significant competition and may be unsuccessful in competing against current and future competitors. We rely on our suppliers, third-party carriers and third-party jewelers as part of our fulfillment process, and these third parties may fail to adequately serve our customers. If our fulfillment operations are interrupted for any significant period of time, our business and results of operations would be substantially harmed. We rely on the services of our small, specialized workforce and key personnel, many of whom would be difficult to replace. We face the risk of theft of our products from inventory or during shipment. If the single facility where substantially all of our computer and communications hardware is located fails, our business, results of operations and financial condition would be harmed. Our systems are vulnerable to cyber attacks. Our failure to protect confidential information of our customers and our network against security breaches could damage our reputation and brand and substantially harm our business and results of operations. Our net sales consist exclusively of diamonds and fine jewelry, and demand for these products could decline. System interruptions that impair customer access to our websites would damage our reputation and brand and substantially harm our business and results of operations. We may be unsuccessful in further expanding our operations internationally. In order to increase net sales and to sustain or increase profitability, we must attract customers in a cost-effective manner. If we are unable to accurately manage our inventory of fine jewelry, our reputation and results of operations could suffer. Our stock price has been volatile historically, and may continue to be volatile. Further, the sale of our common stock by significant stockholders may cause the price of our common stock to decrease. Repurchases of our common stock may not prove to be the best use of our cash resources. We have foreign exchange risk. Our cash, cash equivalents and short-term investments are subject to a risk of loss based upon the solvency of the financial institutions in which they are maintained. Failure to adequately protect or enforce our intellectual property rights could substantially harm our business and results of operations. The success of our business may depend on our ability to successfully expand our product offerings. Assertions by third parties of infringement by us of their intellectual property rights could result in significant costs and substantially harm our business and results of operations. Increased product returns and the failure to accurately predict product returns could substantially harm our business and results of operations. Purchasers of diamonds and fine jewelry may not choose to shop online, which would prevent us from growing our business. If use of the Internet, particularly with respect to online commerce, does not continue to increase as rapidly as we anticipate, our business and results of operations will be harmed. Our failure to address risks associated with payment methods, credit card fraud and other consumer fraud could damage our reputation and brand and may cause our business and results of operations to suffer. We rely on our relationship with a third-party consumer credit company to offer financing for the purchase of our products. We may undertake acquisitions to expand our business, which may pose risks to our business and dilute the ownership of our existing stockholders. Our failure to rapidly respond to technological change could result in our services or systems becoming obsolete and substantially harm our business and results of operations. We may have exposure to greater than anticipated tax liabilities. Government regulation of the Internet and e-commerce is evolving and unfavorable changes could substantially harm our business and results of operations. We may need to implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to satisfy new reporting requirements. Our failure to effectively manage the growth in our operations may prevent us from successfully expanding our business.

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1091171--2/25/2010--BLUE_NILE_INC