Blackberry 2012 Annual Report Download - page 64

The Company’s ability to maintain or increase its cash balance could be adversely affected by its ability to offer
competitive products and services in a timely manner at competitive prices.
As of the end of fiscal 2012, the Company had cash, cash equivalents and investments of approximately $2.1 billion with negligible
indebtedness. The Company generates cash from sales of its products and services and investment income to fund its operations and
investments. The Company’s working capital requirements and cash flows historically have been, and are expected to continue to be,
subject to quarterly and yearly fluctuations, depending on such factors as timing and success of new product introductions, levels of
sales, returns on the Company’s investment portfolio, timing of deliveries and collection of receivables, inventory levels, capital
expenditures, operating expenses, and customer and supplier terms and conditions. The Company’s ability to maintain or increase its
cash flow and working capital could be adversely affected if it is unable to successfully complete the transition to its next-generation
of BlackBerry 10 smartphones, which are currently expected to launch in the latter part of 2012. As noted above, the process of
developing new technology is complex and uncertain, and involves time, substantial costs and risks. The Company’s inability, for
technological or other reasons, some of which may be beyond the Company’s control, to enhance, develop and introduce products and
services in a timely manner, or at all, in response to changing market conditions or customer requirements could have a material
adverse effect on the Company’s financial condition or could result in its products and services becoming obsolete. In addition, if the
Company fails to accurately predict emerging technological trends and the changing needs of customers and end-users, or the features
of its new products and services, including its BlackBerry 10 smartphones, do not meet the expectations or achieve acceptance of its
customers, its cash flow, liquidity and financial condition could be materially harmed. The Company believes that ahead of the
BlackBerry 10 launch and throughout the remainder of fiscal 2013, it will be critical to improve sales of its BlackBerry 7 smartphones
to sustain the Company’s subscriber base and the Company is also relying on its ability to successfully implement and realize the
benefits of anticipated cost savings through its CORE program. As noted above, the Company is also facing greater pressure to reduce
its infrastructure access fees.
If the Company is unable to maintain or increase its cash balance it may be required to raise additional funds through the issuance of
equity, debt or a combination of equity and debt, or may be required to reduce or delay capital expenditures, further reduce costs,
reallocate resources within the Company or consider other alternatives. Access to additional capital may not, however, be available on
terms acceptable to the Company or at all. Furthermore, any future equity offering could be dilutive to existing shareholders and any
drawdown on the Company’s existing credit facility or any future debt financing would require the Company to dedicate a portion of
its cash flow to payments on indebtedness, would require the Company to comply with restrictive covenants or to meet certain
financial tests, and would limit the Company’s flexibility in planning for or reacting to changes in its business. There can be no
assurance that the Company’s strategies will be successful or that it will be able to maintain or increase its cash balance.
The occurrence or perception of a breach of the Company’s security measures or an inappropriate disclosure of
confidential or personal information could harm its business.
The BlackBerry wireless solution frequently involves the transmission of business-critical, proprietary, confidential and personal
information of end users. If such information is misdirected or accessed without the consent or knowledge of the user, the Company
may face litigation, potential liability, regulatory sanctions and damage to its reputation. In addition, information stored in the
Company’s products and on the Company’s network is subject to viruses and security breaches related to wireless data transmission.
Attempts by outside parties to access confidential or personal information of companies or their customers have, unfortunately,
become commonplace. Unauthorized parties can attempt to breach a company’s security measures through the actions of outside
parties (e.g., hacking or malware) or employee action (e.g., error, malfeasance, or otherwise), in an attempt to obtain access to
confidential or personal information. Additionally, outside parties may attempt to fraudulently induce employees, users, partners or
customers to disclose sensitive information in order to gain access to confidential or personal information. Third party applications
that are downloaded by a user on their BlackBerry smartphone or BlackBerry PlayBook tablet could also increase the risk of a
potential unauthorized access, misuse or misdirection of confidential or personal information because some applications require
access to such information. Given the Company’s focus on the security of the BlackBerry solution, even perceptions that the
Company’s products and services do not adequately protect confidential or personal information could adversely affect the Company,
through damage to its reputation or otherwise, regardless of whether an end user of its products and services has consented to access
to, or use of, such information.
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