Blackberry 2016 Annual Report Download - page 33

Table of Contents
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relationship with the Company for any reason, reduces or postpones current or expected purchase commitments for products
and services, or promotes the products and services of a competitor over those of the Company, the Company’s business, results
of operations and financial condition could be materially adversely affected. 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.
Acquisitions, divestitures, investments and other business initiatives may negatively affect the Company’s results of
operations.
The Company has acquired, and continues to seek out opportunities to acquire or invest in, businesses, assets, products, services
and technologies that expand, complement or are otherwise related to the Company’s business or provide opportunities for
growth. For example, in fiscal 2016, the Company acquired Encription, Good, AtHoc and WatchDox (see “General
Development of the Business - Fiscal 2016” in this AIF). In addition, the Company is increasingly collaborating and partnering
with third parties to develop technologies, products and services, as well as seek new revenue through partnering arrangements.
These activities involve significant challenges and risks, including: that they may not advance the Company’s strategic
objectives or generate a satisfactory return on investment; that the Company may have difficulty integrating and managing new
employees, business systems, and technology; the potential loss of key employees of an acquired business; additional demands
on the Company’s management, resources, systems, procedures and controls; disruption of the Company’s ongoing business;
and diversion of management’s attention from other business concerns. Acquisitions, investments or other strategic
collaborations or partnerships may involve significant commitments of financial and other resources of the Company. If these
fail to perform as expected, or if the Company fails to enter into and execute the transactions or arrangements needed to
succeed, the Company may not be able to bring its products, services or technologies to market successfully or in a timely
manner, or its operations could be affected adversely.
Furthermore, an acquisition may have an adverse effect on the Company’s cash position if all or a portion of the purchase price
is paid in cash, and common shares issuable in an acquisition would dilute the percentage ownership of the Company’s existing
shareholders. Any such activity may not be successful in generating revenue, income or other returns to the Company, and the
financial or other resources committed to such activities would not be available to the Company for other purposes. In addition,
the acquisitions may involve unanticipated costs and liabilities, including possible litigation and new or increased regulatory
exposure, which are not covered by the indemnity or escrow provisions, if any, of the relevant acquisition agreements.
As business circumstances dictate, the Company may also decide to divest itself of assets or businesses. The Company may not
be successful in identifying or managing the risks involved in any divestiture, including its ability to obtain a reasonable
purchase price for the assets, potential liabilities that may continue to apply to the Company following the divestiture, potential
tax implications, employee issues or other matters. The Company’s inability to address these risks could adversely affect the
Company’s business, results of operations and financial condition.
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, including 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 alleged noncompliance with local
laws or other events. The increased number of third party applications on the Company’s network may also enhance the risk of
network disruption or cyber attack for the Company. There may also be system or network interruptions if new or upgraded
systems are defective or not installed properly.
The Company has experienced network events in the past, and any future outage in a network or system or other unanticipated
problem that leads to an interruption or disruption of BlackBerry services could have a material adverse effect on the
Company’s business, results of operations and financial condition, and could adversely affect the Company’s longstanding
reputation for reliability, thereby resulting in end users purchasing products offered by its competitors. As the Company moves
to handle increased data traffic and support more applications or services, the risk of disruption and the expense of maintaining
a resilient and secure network services capability may significantly increase.
In fiscal 2017, the Company expects to implement a new enterprise resource planning (“ERP”) software system. Any
disruptions impacting the Company’s operations during the implementation period could adversely affect the Company’s
business in a number of respects. Even if adverse effects are not encountered, the implementation of the ERP system may be
much more costly than anticipated. If the Company is unable to successfully implement the ERP system as planned, its
business, results of operations and financial condition could be negatively impacted.