EMC 2003 Annual Report Download - page 32

currency exchange rates, changes in a specific country's or region's political or economic conditions, trade restrictions, import or export licensing
requirements, the overlap of different tax structures or changes in international tax laws, changes in regulatory requirements, compliance with a variety of
foreign laws and regulations and longer payment cycles in certain countries.
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Undetected problems in our products could directly impair our financial results.
If flaws in design, production, assembly or testing of our products (by us or our suppliers) were to occur, we could experience a rate of failure in our
products that would result in substantial repair, replacement or service costs and potential damage to our reputation. Continued improvement in manufacturing
capabilities, control of material and manufacturing quality and costs and product testing are critical factors in our future growth. There can be no assurance
that our efforts to monitor, develop, modify and implement appropriate test and manufacturing processes for our products will be sufficient to permit us to
avoid a rate of failure in our products that results in substantial delays in shipment, significant repair or replacement costs or potential damage to our
reputation, any of which could have a material adverse effect on our business, results of operations or financial condition.
Our business could be materially adversely affected as a result of the risks associated with alliances.
We have alliances with leading information technology companies and we plan to continue our strategy of developing key alliances in order to expand
our reach into markets. There can be no assurance that we will be successful in our ongoing strategic alliances or that we will be able to find further suitable
business relationships as we develop new products and strategies. Any failure to continue or expand such relationships could have a material adverse effect on
our business, results of operations or financial condition.
There can be no assurance that companies with which we have strategic alliances, certain of which have substantially greater financial, marketing or
technological resources than us, will not develop or market products in competition with us in the future, discontinue their alliances with us or form alliances
with our competitors.
Our business may suffer if we cannot protect our intellectual property.
We generally rely upon patent, copyright, trademark and trade secret laws and contract rights in the United States and in other countries to establish and
maintain our proprietary rights in our technology and products. However, there can be no assurance that any of our proprietary rights will not be challenged,
invalidated or circumvented. In addition, the laws of certain countries do not protect our proprietary rights to the same extent as do the laws of the United
States. Therefore, there can be no assurance that we will be able to adequately protect our proprietary technology against unauthorized third-party copying or
use, which could adversely affect our competitive position. Further, there can be no assurance that we will be able to obtain licenses to any technology that we
may require to conduct our business or that, if obtainable, such technology can be licensed at a reasonable cost.
From time to time, we receive notices from third parties claiming infringement by our products of third-party patent or other intellectual property rights.
Responding to any such claim, regardless of its merit, could be time-consuming, result in costly litigation, divert management's attention and resources and
cause us to incur significant expenses. In the event there is a temporary or permanent injunction entered prohibiting us from marketing or selling certain of our
products or a successful claim of infringement against us requiring us to pay royalties to a third party, and we fail to develop or license a substitute
technology, our business, results of operations or financial condition could be materially adversely affected.
We may become involved in litigation that may materially adversely affect us.
In the ordinary course of business, we may become involved in litigation, administrative proceedings and governmental proceedings. Such matters can be
time-consuming, divert management's attention and resources and cause us to incur significant expenses. Furthermore, there can be no assurance that the
results of any of these actions will not have a material adverse effect on our business, results of operations or financial condition.
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We may have exposure to additional income tax liabilities.
As a multinational corporation, we are subject to income taxes in both the United States and various foreign jurisdictions. Our domestic and international
tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions and the timing of recognizing revenues and expenses.
Additionally, the amount of income taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. From time to time,
we are subject to income tax audits. While we believe we have complied with all applicable income tax laws, there can be no assurance that a governing tax
authority will not have a different interpretation of the law and assess us with additional taxes. Should we be assessed with additional taxes, there could be a
material adverse affect on our results of operations or financial condition.
Changes in regulations could materially adversely affect us.
Our business, results of operations or financial condition could be materially adversely affected if laws, regulations or standards relating to us or our
products are newly implemented or changed.
Our stock price is volatile.
Our stock price, like that of other technology companies, is subject to significant volatility because of factors such as: