Blackberry 2015 Annual Report Download - page 33

Table of Contents
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products and services, or those carriers and distributors may stop carrying the Company’s products or de-emphasize the sale of
its products and services in favor of the Company’s competitors, which would have a material adverse effect on the Company’s
business, results of operations and financial condition. There can be no assurance that the network carriers and distributors will
act in a manner that will promote the success of the Company’s products and services.
The Company has a number of significant customers and large complex contracts with respect to sales of the majority of its
products and services. Revenue from network carriers represented approximately 67% of revenue for fiscal 2015, compared to
approximately 60% of revenue for fiscal 2014. If any significant customer discontinues its relationship with the Company for
any reason, reduces or postpones current or expected purchase commitments for the Company’s products and services, or
promotes the products and services of a competitor over those of the Company, it could have a material adverse effect on the
Company’s business, results of operations and financial condition. The Company’s ability to replace or find new large
customers is necessarily limited due to the limited number of wireless carriers and distributors in many territories.
The Company, in the normal course of business, monitors the financial condition of its customers and reviews the credit history
of each new customer. The Company establishes an allowance for doubtful accounts intended to correspond to the specific
credit risk of its customers, historical trends, and economic circumstances. The Company’s allowances for doubtful accounts
may prove to be inaccurate or insufficient. If the Company experiences significant net bad debts expense for any reason, there
could be a material adverse effect on the Company’s business, results of operations and financial condition.
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.
BlackBerry products and services frequently involve the transmission of business-critical, proprietary, confidential and personal
information of end users, and can include on-premise and cloud deployments. Like many other companies, the Company has
been in the past, and expects to be in the future, the target of attempts by unauthorized third parties to access such information
by breaching security measures that the Company or its partners have implemented.
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 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.
If the security measures implemented by the Company or its partners are breached, or perceived to be breached, or if there is an
inappropriate disclosure or misdirection of confidential or personal information, including as a result of a security breach or
virus relating to hardware or software, the Company could be exposed to litigation, potential liability and regulatory sanctions.
Even if the Company was not held liable, a security breach or inappropriate disclosure of confidential or personal information
(or the perception that such a breach has occurred) could materially damage the Company’s reputation, which is built in large
measure on the security and reliability of BlackBerry products and services, and even the perception of security vulnerabilities
in the Company’s products, services or network operations, could lead some customers, particularly governmental customers, to
reduce or delay future purchases or to purchase competitive products or services.
In addition, the Company may be required to invest additional resources or change its products, services or network operations
to protect itself against damage caused by these actual or perceived disruptions or security breaches in the future and these
actions may have a detrimental impact, for example, on cost, the user experience or compatibility with third party products and
services. Since the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change
frequently and often are not recognized until launched against a target, or may not be identified until a later time, the Company
may not be able to anticipate these techniques, to implement adequate preventative measures or to remedy them in a timely
manner. The risk that these types of events could seriously harm the Company’s business may increase as the Company
expands the number of web-based products and services that it offers, increases the number of countries where the Company
operates, and expands its ecosystem to offer third party products and services in conjunction with its own.
Network disruptions or other business interruptions could have a material adverse effect on the Company’s
business and harm its reputation.
BlackBerry services are provided through the Company’s network operations, often together with the wireless networks of its
carrier partners. The Company’s operations rely to a significant degree on the efficient and uninterrupted operation of complex
technology systems and networks, which are in some cases integrated with those of third parties. The Company’s networks and
technology systems are potentially vulnerable to damage or interruption from a variety of sources, physical or logical, including
damage or interruption by fire, earthquake, power loss, telecommunications or computer systems failure, cyber attack, human
error, terrorist acts, war, and the threatened or actual suspension of BlackBerry services at the request of a government for