Adobe 2009 Annual Report Download - page 40

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or other liabilities. In addition, such perceived or actual unauthorized disclosure of the information we collect or breach of
our security could result in the loss of customers and harm our business.
Because of the large amount of data that we collect and manage on behalf of our customers, it is possible that hardware
failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be
incomplete or contain inaccuracies that our customers regard as significant. Furthermore, our ability to collect and report data
may be delayed or interrupted by a number of factors, including access to the Internet, the failure of our network or software
systems, security breaches or significant variability in visitor traffic on customer Websites. In addition, computer viruses may
harm our systems causing us to lose data, and the transmission of computer viruses could expose us to litigation. We may
also find, on occasion, that we cannot deliver data and reports to our customers in near real time because of a number of
factors, including significant spikes in consumer activity on their Websites or failures of our network or software. We may be
liable to our customers for damages they may incur resulting from these events, such as loss of business, loss of future
revenues, breach of contract or for the loss of goodwill to their business. In addition to potential liability, if we supply
inaccurate information or experience interruptions in our ability to capture, store and supply information in near real time or
at all, our reputation could be harmed and we could lose customers.
On behalf of certain of our customers using our services, including those using services offered by our Omniture
business unit, we collect and use information derived from the activities of Website visitors, which may include anonymous
and/or personal information. This enables us to provide such customers with reports on aggregated anonymous or personal
information from and about the visitors to their Websites in the manner specifically directed by such customers. Federal, state
and foreign government bodies and agencies have adopted or are considering adopting laws regarding the collection, use and
disclosure of this information. Therefore, our compliance with privacy laws and regulations and our reputation among the
public body of Website visitors depend on such customers’ adherence to privacy laws and regulations and their use of our
services in ways consistent with such visitors’ expectations. We also rely on representations made to us by customers that
their own use of our services and the information we provide to them via our services do not violate any applicable privacy
laws, rules and regulations or their own privacy policies. We ask customers to represent to us that they provide their Website
visitors the opportunity to “opt-out” of the information collection associated with our services, as applicable. We do not
formally audit such customers to confirm compliance with these representations. If these representations are false or if such
customers do not otherwise comply with applicable privacy laws, we could face potentially adverse publicity and possible
legal or other regulatory action.
Failure to manage our sales and distribution channels and third-party customer service and technical support providers
effectively could result in a loss of revenue and harm to our business.
A significant amount of our revenue for application products is from two distributors, Ingram Micro, Inc. and Tech
Data Corporation, which represented 15% and 8% of our net revenue for fiscal 2009, respectively. We have multiple non-
exclusive, independently negotiated distribution agreements with Ingram Micro and Tech Data and their subsidiaries
covering our arrangements in specified countries and regions. Each of these contracts has an independent duration, is
independent of any other agreement (such as a master distribution agreement) and any termination of one agreement does not
affect the status of any of the other agreements. In fiscal 2009, no single agreement with these distributors was responsible
for over 10% of our total net revenue. If any one of our agreements with these distributors were terminated, we believe we
could make arrangements with new or existing distributors to distribute our products without a substantial disruption to our
business; however, any prolonged delay in securing a replacement distributor could have a negative short-term impact on our
results of operations.
Successfully managing our indirect channel efforts to reach various potential customer segments for our products and
services is a complex process. Our distributors are independent businesses that we do not control. Notwithstanding the
independence of our channel partners, we face potential legal risk from the activities of these third parties including, but not
limited to, export control violations, corruption and anti-competitive behavior. Although we have undertaken efforts to
reduce these third-party risks, they remain present. We cannot be certain that our distribution channel will continue to market
or sell our products effectively. If we are not successful, we may lose sales opportunities, customers and revenues.
Our distributors also sell our competitors’ products, and if they favor our competitors’ products for any reason, they
may fail to market our products as effectively or to devote resources necessary to provide effective sales, which would cause
our results to suffer. We also distribute some products through our OEM channel, and if our OEMs decide not to bundle our
applications on their devices, our results could suffer.