EMC 2008 Annual Report Download - page 13

Table of Contents
ITEM 1A. RISK FACTORS
The risk factors that appear below could materially affect our business, financial condition and results of operations. The risks and uncertainties
described below are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other
companies.
Our business could be materially adversely affected as a result of general economic and market conditions, including the current economic crisis.
We are subject to the effects of general global economic and market conditions. If these conditions remain uncertain or persist, spread or deteriorate
further, our business, results of operations or financial condition could be materially adversely affected. In addition, the financial crisis in the banking sector
and financial markets have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed
income, credit and equity markets. Possible consequences from the financial crisis on our business, including insolvency of key suppliers resulting in product
delays, inability of customers to obtain credit to finance purchases of our products and/or customer insolvencies, increased risk that customers may delay
payments, fail to pay or default on credit extended to them, and counterparty failures negatively impacting our treasury operations, could have a material
adverse effect on our results of operations or financial condition.
Our business could be materially adversely affected as a result of a lessening demand in the information technology market.
Our revenue and profitability depend on the overall demand for our products and services. Delays or reductions in IT spending, domestically or
internationally, could materially adversely affect demand for our products and services which could result in decreased revenues or earnings.
Our customers operate in a variety of markets, including the financial services, credit and housing, automotive and construction markets. Any adverse
effects to such markets could materially adversely affect demand for our products and services which could result in decreased revenues or earnings.
Competitive pricing, sales volume, mix and component costs could materially adversely affect our revenues, gross margins and earnings.
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 component costs, increased pricing pressures, the relative and varying rates of increases or
decreases in component costs and product price, changes in product and services revenue mixture or decreased volume could have a material adverse effect on
our revenues, gross margins or earnings.
The costs of third-party components comprise a significant portion of our product costs. While we generally have been able to manage our component
and product design costs, we may have difficulty managing such costs if supplies of certain components become limited or component prices increase. Any
such limitation could result in an increase in our component costs. An increase in component or design costs relative to our product prices could have a
material adverse effect on our gross margins and earnings. Moreover, certain competitors may have advantages due to vertical integration of their supply
chain, which may include disk drives, microprocessors, memory components and servers.
The markets in which we do business are highly competitive and we may encounter aggressive price competition for all of our products and services
from numerous companies globally. There also has been and may continue to be a willingness on the part of certain competitors to reduce prices or provide
information infrastructure and virtual infrastructure products or services, together with other IT products or services, at minimal or no additional cost in order
to preserve or gain market share. Such price competition may result in pressure on our product and service prices, and reductions in product and service prices
may have a material adverse effect on our revenues, gross margins and earnings. We currently believe that pricing pressures will continue.
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
9