Blackberry 2013 Annual Report Download - page 84

of the Company’s common shares. The Company’s financial results may not follow any past trends. In particular, the Company’s
entry into new markets and its introduction of new products may increase the difficulty of forecasting financial results. The
Company’s sales may also be impacted by current economic factors which more significantly impact other industry sectors, such as
the financial, government and legal services sectors and increased adoption in those sectors of products of the Company’s
competitors. These sectors have represented the Company’s largest end user concentration to date.
The Company’s operating expenses are based on anticipated revenue levels, are relatively fixed in the short term to medium term and
are incurred throughout the quarter; thus, fluctuations in operating profit are likely. Significant unanticipated sales and marketing,
R&D, IT, professional and other costs may be incurred in a single quarter which will affect results. Additionally, many of the
Company’s products are subject to long sales cycles. As a result, if expected revenues are not realized as anticipated, or if operating
expenses are higher than expected, the Company’s financial results could be materially adversely affected. These factors can make it
difficult to predict the Company’s financial results. Difficulties forecasting financial results over longer periods increase significantly
given the rapid technological changes, evolving industry standards, intense competition and short product life cycles that characterize
the wireless communications industry.
In addition, a carrier may instruct the Company to deactivate a subscriber account, in which case the Company ceases billing the
carrier with respect to such account from the date of its deactivation. On a quarterly basis, the Company may make an estimate of
pending deactivations for certain carriers that do not use a fully-integrated provisioning system. It is, however, each carrier’s
responsibility to report changes to its subscriber account status on a timely basis to the Company. The Company’s failure to meet the
expectations of analysts or investors as a result of difficulties in predicting changes in its subscriber base may further contribute to the
volatility of the market price of its common shares.
There could be adverse tax consequence for the Company’s shareholders in the United States if the Company is or was a
passive foreign investment company.
Under U.S. federal income tax laws, if a company is, or for any past period was, a passive foreign investment company (“PFIC”),
there could be adverse U.S. federal income tax consequences to U.S. shareholders even if the Company is no longer a PFIC. The
determination of whether the Company is a PFIC is a factual determination made annually based on various facts and circumstances
and thus is subject to change, and the principles and methodology used in determining whether a company is a PFIC are subject to
interpretation. While the Company does not believe that it is currently or has been a PFIC, there can be no assurances that the
Company was not a PFIC in the past and will not be a PFIC in the future. U.S. shareholders are urged to consult their tax advisors
concerning U.S. federal income tax consequences of holding the Company’s common shares if the Company is or has been
considered a PFIC.
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