Adobe 2009 Annual Report Download - page 35

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fuel and other energy costs, difficulties in the financial services sector and credit markets, continuing geopolitical
uncertainties, increasing unemployment and other macro-economic factors affecting spending behavior. If economic growth
in the U.S. and other countries continues to be slow and does not improve, many customers may delay or reduce technology
purchases, advertising spending or marketing spending. This could result in continued reductions in sales of our products and
services, longer sales cycles, slower adoption of new technologies and increased price competition.
The current global financial crisis affecting the banking system and financial markets and the possibility that financial
institutions may consolidate or go out of business have resulted in a tightening in the credit markets, a low level of liquidity
in many financial markets, and increased volatility in fixed income, credit, currency and equity markets. There could be a
number of follow-on effects from the credit crisis on our business, including insolvency of certain of our key distributors,
resellers, OEMs, retailers and systems integrators, ISVs and VARs (collectively referred to as “distributors”), which could
impair our distribution channels, inability of customers, including our distributors, to obtain credit to finance purchases of our
products and services, and failure of derivative counterparties and other financial institutions, which could negatively impact
our treasury operations. Other income and expense could also vary from expectations depending on gains or losses realized
on the sale or exchange of financial instruments, impairment charges related to investment securities as well as equity and
other investments, interest rates, cash balances, and changes in fair value of derivative instruments. Any of these events
would likely harm our business, results of operations and financial condition.
Political instability in any of the major countries we do business in would also likely harm our business, results of
operations and financial condition.
If we cannot continue to develop, market and distribute new products and services or upgrades or enhancements to existing
products and services that meet customer requirements, our operating results could suffer.
The process of developing new high technology products and services and enhancing existing products and services is
complex, costly and uncertain, and any failure by us to anticipate customers’ changing needs and emerging technological
trends accurately could significantly harm our market share and results of operations. We must make long-term investments,
develop or obtain appropriate intellectual property and commit significant resources before knowing whether our predictions
will accurately reflect customer demand for our products and services. Our inability to extend our core technologies into new
applications and new platforms, including the mobile and embedded devices market, and to anticipate or respond to
technological changes could affect continued market acceptance of our products and services and our ability to develop new
products and services. Additionally, any delay in the development, production, marketing or distribution of a new product or
service or upgrade or enhancement to an existing product or service could cause a decline in our revenue, earnings or stock
price and could harm our competitive position. We maintain strategic relationships with third parties with respect to the
distribution of certain of our technologies. If we are unsuccessful in establishing or maintaining our strategic relationships
with these third parties, our ability to compete in the marketplace or to grow our revenues would be impaired and our
operating results would suffer.
We offer our desktop application-based products primarily on Windows and Macintosh platforms. We generally offer
our server-based products on the Linux platform as well as the Windows and UNIX platforms. To the extent that there is a
slowdown of customer purchases of personal computers on either the Windows or Macintosh platform or in general, or to the
extent that significant demand arises for our products or competitive products on other platforms before we choose and are
able to offer our products on these platforms our business could be harmed. Additionally, to the extent that we have difficulty
transitioning product or version releases to new Windows and Macintosh operating systems, or to the extent new releases of
operating systems or other third-party products make it more difficult for our products to perform, our business could be
harmed.
Introduction of new products, services and business models by existing and new competitors could harm our competitive
position and results of operations.
The markets for our products and services are characterized by intense competition, evolving industry standards and
business models, disruptive software and hardware technology developments, frequent new product and service
introductions, short product and service life cycles, price cutting, with resulting downward pressure on gross margins, and
price sensitivity on the part of consumers. Our future success will depend on our ability to enhance our existing products and
services, introduce new products and services on a timely and cost-effective basis, meet changing customer needs, extend our
core technology into new applications, and anticipate and respond to emerging standards, business models, software delivery