Cisco 2013 Annual Report Download - page 38

OUR BUSINESS AND OPERATIONS ARE ESPECIALLY SUBJECT TO THE RISKS OF EARTHQUAKES,
FLOODS, AND OTHER NATURAL CATASTROPHIC EVENTS
Our corporate headquarters, including certain of our research and development operations are located in the Silicon Valley
area of Northern California, a region known for seismic activity. Additionally, a certain number of our facilities are located
near rivers that have experienced flooding in the past. Also certain of our suppliers and logistics centers are located in regions
that have or may be affected by earthquake, tsunami and flooding activity which in the past has disrupted, and in the future
could disrupt, the flow of components and delivery of products. A significant natural disaster, such as an earthquake, a
hurricane, volcano, or a flood, could have a material adverse impact on our business, operating results, and financial condition.
MAN-MADE PROBLEMS SUCH AS COMPUTER VIRUSES OR TERRORISM MAY DISRUPT OUR
OPERATIONS AND HARM OUR OPERATING RESULTS
Despite our implementation of network security measures our servers are vulnerable to computer viruses, break-ins, and
similar disruptions from unauthorized tampering with our computer systems. Any such event could have a material adverse
effect on our business, operating results, and financial condition. Efforts to limit the ability of malicious third parties to disrupt
the operations of the Internet or undermine our own security efforts may meet with resistance. In addition, the continued threat
of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause
further disruptions to the economies of the United States and other countries and create further uncertainties or otherwise
materially harm our business, operating results, and financial condition. Likewise, events such as widespread blackouts could
have similar negative impacts. To the extent that such disruptions or uncertainties result in delays or cancellations of customer
orders or the manufacture or shipment of our products, our business, operating results, and financial condition could be
materially and adversely affected.
IF WE DO NOT SUCCESSFULLY MANAGE OUR STRATEGIC ALLIANCES, WE MAY NOT REALIZE THE
EXPECTED BENEFITS FROM SUCH ALLIANCES AND WE MAY EXPERIENCE INCREASED COMPETITION
OR DELAYS IN PRODUCT DEVELOPMENT
We have several strategic alliances with large and complex organizations and other companies with which we work to offer
complementary products and services and have established a joint venture to market services associated with our Cisco
Unified Computing System products. These arrangements are generally limited to specific projects, the goal of which is
generally to facilitate product compatibility and adoption of industry standards. There can be no assurance we will realize the
expected benefits from these strategic alliances or from the joint venture. If successful, these relationships may be mutually
beneficial and result in industry growth. However, alliances carry an element of risk because, in most cases, we must compete
in some business areas with a company with which we have a strategic alliance and, at the same time, cooperate with that
company in other business areas. Also, if these companies fail to perform or if these relationships fail to materialize as
expected, we could suffer delays in product development or other operational difficulties. Joint ventures can be difficult to
manage, given the potentially different interests of joint venture partners.
OUR STOCK PRICE MAY BE VOLATILE
Historically, our common stock has experienced substantial price volatility, particularly as a result of variations between our
actual financial results and the published expectations of analysts and as a result of announcements by our competitors and us.
Furthermore, speculation in the press or investment community about our strategic position, financial condition, results of
operations, business, security of our products, or significant transactions can cause changes in our stock price. In addition, the
stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology
companies, in particular, and that have often been unrelated to the operating performance of these companies. These factors, as
well as general economic and political conditions and the announcement of proposed and completed acquisitions or other
significant transactions, or any difficulties associated with such transactions, by us or our current or potential competitors, may
materially adversely affect the market price of our common stock in the future. Additionally, volatility, lack of positive
performance in our stock price or changes to our overall compensation program, including our stock incentive program, may
adversely affect our ability to retain key employees, virtually all of whom are compensated, in part, based on the performance
of our stock price.
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