AMD 2013 Annual Report Download - page 37

investment in automation and engagement of strategic partners or resources to assist with certain business
functions. These changes may be costly and disruptive to our operations and could impose substantial demands
on management time.
These changes may also require changes in our information systems, modification of internal control
procedures and significant training of employees and third-party resources. We are currently implementing an
initiative to transition certain key information technology applications and business systems from various AMD
development locations to centralized consolidated data centers. There can be no assurance that our business and
operations will not experience any disruption in connection with this transition. Our information technology
systems, and those of third-party information technology providers or business partners, may also be vulnerable
to damage or disruption caused by circumstances beyond our control including catastrophic events, power
anomalies or outages, natural disasters, viruses or malware, and computer system or network failures. There can
be no assurance that our business systems or those of our third-party business partners would not be subject to
similar incidents, including cyber-security incidents, exposing us to significant cost, reputational harm and
disruption or damage to our business.
Data breaches and cyber-attacks could compromise our intellectual property or other sensitive information
and cause significant damage to our business and reputation.
In the ordinary course of our business, we maintain sensitive data on our networks, including our intellectual
property and proprietary or confidential business information relating to our business and that of our customers
and business partners. The secure maintenance of this information is critical to our business and reputation. We
believe that companies in the technology industry have been increasingly subject to a wide variety of security
incidents, cyber-attacks and other attempts to gain unauthorized access. Our network and storage applications
may be subject to unauthorized access by hackers or breached due to operator error, malfeasance or other system
disruptions. In some cases, it is difficult to anticipate or immediately detect such incidents and the damage
caused thereby. These data breaches and any unauthorized access or disclosure of our information or intellectual
property could compromise our intellectual property and expose sensitive business information. Cyber-attacks
could also cause us to incur significant remediation costs, disrupt key business operations and divert attention of
management and key information technology resources. These incidents could also subject us to liability, expose
us to significant expense and cause significant harm to our reputation and business.
Uncertainties involving the ordering and shipment of our products could materially adversely affect us.
We typically sell our products pursuant to individual purchase orders. We generally do not have long-term
supply arrangements with our customers or minimum purchase requirements except that orders generally must be
for standard pack quantities. Generally, our customers may cancel orders for standard products more than 30
days prior to shipment without incurring significant fees. We base our inventory levels in part on customers’
estimates of demand for their products, which may not accurately predict the quantity or type of our products that
our customers will want in the future or ultimately end up purchasing. Our ability to forecast demand is even
further complicated when we sell indirectly through distributors, as our forecasts for demand are then based on
estimates provided by multiple parties.
PC and consumer markets are characterized by short product lifecycles, which can lead to rapid
obsolescence and price erosion. In addition, our customers may change their inventory practices on short notice
for any reason. We may build inventories during periods of anticipated growth, and the cancellation or deferral of
product orders or overproduction due to failure of anticipated orders to materialize, could result in excess or
obsolete inventory, which could result in write-downs of inventory and an adverse effect on gross margins.
Factors that may result in excess or obsolete inventory, which could result in write-downs of the value of
our inventory, a reduction in the average selling price or a reduction in our gross margin include:
• a sudden or significant decrease in demand for our products;
• a production or design defect in our products;
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