EMC 2003 Annual Report Download - page 29

the failure of the acquisition to result in expected benefits, which may include benefits relating to enhanced revenues, technology, human
resources, costs savings, operating efficiencies and other synergies
the difficulty and cost of integrating the acquired business, including costs and delays in implementing common systems and procedures and
costs and delays caused by communication difficulties or geographic distances between the two companies' sites
the assumption of liabilities of the acquired business, including litigation-related liabilities
the potential impairment of acquired assets
the lack of experience in new markets, products or technologies or the initial dependence on unfamiliar supply or distribution partners
the diversion of our management's attention from other business concerns
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the impairment of relationships with customers or suppliers of the acquired business or our customers or suppliers
the potential loss of key employees of the acquired company
the potential incompatibility of business cultures
These factors could have a material adverse effect on our business, results of operations or financial condition. To the extent that we issue shares of our
Common Stock or other rights to purchase Common Stock in connection with any future acquisition, existing stockholders may experience dilution and our
earnings per share may decrease.
In addition to the risks commonly encountered in the acquisition of a business as described above, we may also experience risks relating to the challenges
and costs of closing a transaction. Further, the risks described above may be exacerbated as a result of managing the acquisitions of multiple acquisitions at
the same time.
We also seek to invest in businesses that offer complementary products, services or technologies. These investments are accompanied by risks similar to
those encountered in an acquisition of a business.
Competitive pricing, component costs and sales volume could materially adversely affect our revenues, gross margins and earnings.
Competitive pricing pressures exist in the information storage market. There also has been and may continue to be a willingness on the part of certain
competitors to reduce prices or provide storage-related products or services, together with other IT products or services, at minimal or no additional cost in
order to preserve or gain market share. We currently believe that pricing pressures are likely to continue.
To date, we have been able to manage our component and product design costs. However, there can be no assurance that we will be able to continue to
achieve reductions in component and product design costs. Moreover, certain competitors may have advantages due to vertical integration of their supply
chain, which may include disk drives, microprocessors, memory components and servers.
Our gross margins are impacted by a variety of factors, including competitive pricing, component and product design costs as well as the volume and
relative mixture of product and services revenues. Increased pricing pressures, increased component costs, the relative and varying rates of increases or
decreases in product price and component costs, changes in product and services revenue mixture or decreased volume could have a material adverse effect on
our revenues, gross margins or earnings.
If our suppliers are not able to meet our requirements, we could have decreased revenues and earnings.
We purchase or license many sophisticated components and products from one or a limited number of qualified suppliers, including some of our
competitors. These components and products include disk drives, high density memory components, power supplies and software developed and maintained
by third parties. We have experienced delivery delays from time to time because of high industry demand or the inability of some vendors to consistently meet
our quality or delivery requirements. If any of our suppliers were to cancel or materially change contracts or commitments with us or fail to meet the quality
or delivery requirements needed to satisfy customer orders for our products, we could lose time-sensitive customer orders, be unable to develop or sell certain
products cost-effectively or on a timely basis, if at all, and have significantly decreased quarterly revenues and earnings, which would have a material adverse
effect on our business, results of operations and financial condition. Additionally, we periodically transition our product line to incorporate new technologies.
The importance of transitioning our customers smoothly to new technologies, along with
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our historically uneven pattern of quarterly sales, intensifies the risk that the failure of a supplier to meet our quality or delivery requirements will have a
material adverse impact on our revenues and earnings.
We may be unable to keep pace with rapid industry, technological and market changes.
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