Avid 2004 Annual Report Download - page 41

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CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
Some of the statements in this Form 10-K relating to our future performance constitute forward-looking statements.
Such forward-looking statements are based upon management's current expectations and involve known and unknown risks.
Realization of any of these risks may cause actual results to differ materially from the results described in the forward-
looking statements. Certain of these risks are as follows:
Poor global economic conditions could adversely affect demand for our products and the financial condition of our
suppliers, distributors and resellers.
The revenue growth and profitability of our business depends primarily on the overall demand for our products. If
global economic conditions worsen, demand for our products may weaken, as could the financial health of our suppliers,
distributors and resellers, and our business and results of operations could suffer.
Our performance will depend in part on continued market acceptance of our digital nonlinear editing products.
We continue to introduce new digital non-linear products based on our Digital Nonlinear Accelerator architecture,
including upgrades and enhancements to our Media Composer Adrenaline and NewsCutter Adrenaline systems, as well as
Avid Xpress Pro with Avid Mojo and Avid DS Nitris hardware. We will need to continue to focus marketing and sales
efforts on educating potential customers and our resellers about the uses and benefits of these products. The future success
of certain of these products, such as Avid DS Nitris, which enable high-definition production, will also depend on demand
for high definition content and appliances, such as television sets and monitors, that utilize the high definition standard. In
addition, there are several other risks involved with offering new products in general, including, without limitation, the
possibility of defects or errors, failure to meet customer expectations, delays in shipping new products and the introduction
of similar products by our competitors. At the same time, the introduction and transition to new products could have a
negative impact on the market for our existing products, which could adversely affect our revenues and business.
The broadcast market is large, widely dispersed, and highly competitive, and we may not be successful in growing
our customer base or predicting customer demand in this market.
We are continuing to enhance our presence in the digital broadcast market and have augmented our NewsCutter
product offering with the Avid Unity for News products, and other server, newsroom, and browser products. The broadcast
market is distinguished from our traditional video business in that turnkey, fully integrated, complex solutions (including the
configuration of unique workflows), rather than discrete point products, are frequently required by the customer. Success in
this market will require, among other things, creating and implementing compelling solutions and developing a strong, loyal
customer base.
In addition, large, complex broadcast orders often require us to devote significant sales, engineering,
manufacturing, installation, and support resources to ensure their successful and timely fulfillment. As the broadcast market
converts from analog to digital, our strategy has been to build our broadcast solutions team in response to customer demand.
To the extent that customer demand for our broadcast solutions exceeds our expectations, we may encounter difficulties in
the short run meeting our customers’ needs. Meanwhile, our competitors may devote greater resources to the broadcast
market than we do, or may be able to leverage their market presence more effectively. If we are unsuccessful in expanding
our share of this digital broadcast market or in predicting and satisfying customer demand, our business and revenues could
be adversely affected.
A portion of our revenue is dependent on sales of large, complex solutions.
We expect sales of large, complex solutions to continue to constitute a material portion of our net revenue,
particularly as news stations convert from analog, or tape-based, processes to digital formats. Our quarterly and annual
revenues could fluctuate if:
• sales to one or more of our customers are delayed or are not completed within a given quarter;
• the contract terms preclude us from recognizing revenue during that quarter;
• news stations’ migrations to networked digital infrastructure slows down;
• we are unable to complete complex customer installations on schedule;
• our customers reduce their capital investments in our products in response to slowing economic growth; and
• any of our large customers terminate their relationship with us or significantly reduce the amount of business
they do with us.