Citrix 2012 Annual Report Download - page 22

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effect on our cost structure or negatively impact the right to use access circuits currently available to us. This could also result
in a decline in customer use and adversely affect sales of our Collaboration products and our results of operations.
Our products could contain errors that could delay the release of new products or that may not be detected until after our
products are shipped.
Despite significant testing by us and by current and potential customers, our products, especially new products or releases
or acquired products, could contain errors. In some cases, these errors may not be discovered until after commercial shipments
have been made. Errors in our products could delay the development or release of new products and could adversely affect
market acceptance of our products. Additionally, our products depend on third-party products, which could contain defects and
could reduce the performance of our products or render them useless. Because our products are often used in mission-critical
applications, errors in our products or the products of third parties upon which our products rely could give rise to warranty or
other claims by our customers, which may have a material adverse effect on our business, financial condition and results of
operations.
We may experience outages, data loss and service disruptions of our Collaboration and Data products and Networking and
Cloud products, which could significantly and adversely affect our financial condition and operating results.
The increasing user traffic and complexity of our Collaboration and Sharing products and Networking and Cloud products
demands more computing power. We have spent and expect to continue to spend substantial amounts to adequately resource
our Collaboration and Data products and Networking and Cloud products and to upgrade our technology and network
infrastructure to handle the increased traffic of our collaboration and data products. Maintaining and expanding the capacity
and geographic footprint of our infrastructure is expensive and complex. Inefficiencies or operational failures, including
temporary service outages and temporary or permanent loss of customer data, could diminish the perceived quality and
reliability of our services, and result in liability claims by customers and other third parties, damage to our reputation and loss
of current and potential customers, any of which could materially and adversely affect our financial condition and results of
operations.
Our long sales cycle for Desktop Virtualization and Bytemobile Smart Capacity products could cause significant variability
in our revenue and operating results for any particular period.
Generally, a substantial portion of our large and medium-sized customers implement our Desktop Virtualization products
on a departmental or enterprise-wide basis. We have a long sales cycle for these departmental or enterprise-wide sales because:
• our sales force generally needs to explain and demonstrate the benefits of a large-scale deployment of our product
to potential and existing customers prior to sale;
• our service personnel typically spend a significant amount of time assisting potential customers in their testing and
evaluation of our products and services;
• our customers are typically large and medium size organizations that carefully research their technology needs and
the many potential projects prior to making capital expenditures for software infrastructure; and
• before making a purchase, our potential customers usually must get approvals from various levels of decision
makers within their organizations, and this process can be lengthy.
Our long sales cycle for these products makes it difficult to predict when these sales will occur, and we may not be able
to sustain these sales on a predictable basis. In addition, the long sales cycle for these products makes it difficult to predict the
quarter in which sales will occur. Delays in sales could cause significant variability in our revenue and operating results for any
particular period, and large projects with significant IT components may fail to meet our customers' business requirements or
be canceled before delivery, which likewise could adversely affect our revenue and operating results for any particular period.
Similarly, our Bytemobile Smart Capacity products have a long and unpredictable sales cycle, and the timing of the
related revenue is difficult to predict. Because our sales of Bytemobile Smart Capacity products are focused on the
telecommunications market, we are subject to lengthy internal budgeting, approval and competitive evaluation processes that
such customers generally require.
In addition, our business is subject to seasonal fluctuations and are generally highest in our fourth fiscal quarter which we
believe is due to the lapse of customers' fiscal year budgets and an increase in amounts paid pursuant to our sales compensation
plans due to compensation plan accelerators that are often triggered in the fourth quarter. We believe that these seasonal factors
are common within our industry. In addition, our European operations generally generate lower revenues in the summer months
because of the generally reduced economic activity in Europe during the summer.