Adobe 2012 Annual Report Download - page 45

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We outsource a substantial portion of our customer service and technical support activities to third-party service providers.
We rely heavily on these third-party customer service and technical support representatives working on our behalf and we expect
to continue to rely heavily on third parties in the future. This strategy provides us with lower operating costs and greater flexibility,
but also presents risks to our business, including the possibilities that we may not be able to influence the quality of support that
we provide as directly as we would be able to do in our own company-run call centers, and that our customers may react negatively
to providing information to, and receiving support from, third-party organizations, especially if based overseas. If we encounter
problems with our third-party customer service and technical support providers, our reputation may be harmed and our revenue
may be adversely affected.
Catastrophic events may disrupt our business.
We are a highly automated business and rely on our network infrastructure and enterprise applications, internal technology
systems and our website for our development, marketing, operational, support, hosted services and sales activities. In addition,
some of our businesses rely on third-party hosted services and we do not control the operation of third-party data center facilities
serving our customers from around the world, which increases our vulnerability. A disruption, infiltration or failure of these systems
or third-party hosted services in the event of a major earthquake, fire, flood, power loss, telecommunications failure, software or
hardware malfunctions, cyber-attack, war, terrorist attack or other catastrophic event could cause system interruptions, reputational
harm, loss of intellectual property, delays in our product development, lengthy interruptions in our services, breaches of data
security and loss of critical data and could prevent us from fulfilling our customers' orders. Our corporate headquarters, a significant
portion of our research and development activities, certain of our data centers and certain other critical business operations are
located in the San Francisco Bay Area, and additional facilities where we conduct significant operations are located in the Salt
Lake Valley Area, both of which are near major earthquake faults. We have developed certain disaster recovery plans and backup
systems to reduce the potentially adverse effect of such events, but a catastrophic event that results in the destruction or disruption
of any of our data centers or our critical business or information technology systems could severely affect our ability to conduct
normal business operations and, as a result, our future operating results could be adversely affected.
Net revenue, margin or earnings shortfalls or the volatility of the market generally may cause the market price of our stock to
decline.
The market price for our common stock has experienced significant fluctuations and may continue to fluctuate significantly.
A number of factors may affect the market price for our common stock, including:
• shortfalls in our revenue, margins, earnings or key performance metrics;
• confusion on the part of industry analysts and investors about the long-term impact to our business resulting from our
subscription offerings;
• shortfalls in the number of paid, active Creative Cloud subscribers and ARR;
• changes in estimates or recommendations by securities analysts;
• the announcement of new products, product enhancements or service introductions by us or our competitors;
• seasonal variations in the demand for our products and services and the implementation cycles for our new customers;
• the loss of a large customer or our inability to increase sales to existing customers and attract new customers;
• variations in our or our competitors' results of operations, changes in the competitive landscape generally and
developments in our industry; and
• unusual events such as significant acquisitions, divestitures, litigation, general socio-economic, regulatory, political or
market conditions and other factors, including factors unrelated to our operating performance.
We are subject to risks associated with compliance with laws and regulations globally which may harm our business.
We are a global company subject to varied and complex laws, regulations and customs domestically and internationally.
These laws and regulations relate to a number of aspects of our business, including trade protection, import and export control,
data and transaction processing security, records management, employee data privacy, user-generated content hosted on websites
we operate, corporate governance, employee and third-party complaints, gift policies, conflicts of interest, employment and labor
relations laws, securities regulations and other regulatory requirements affecting trade and investment. The application of these
laws and regulations to our business is often unclear and may at times conflict. Compliance with these laws and regulations may
involve significant costs or require changes in our business practices that result in reduced revenue and profitability. Non-compliance
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