EMC 2008 Annual Report Download - page 14

Table of Contents
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 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. The current economic crisis may also negatively affect our suppliers' solvency, which could, in turn,
result in product delays or otherwise materially adversely affect our business, results of operations or financial condition.
Our financial performance may be impacted by the financial performance of VMware.
Because we consolidate VMware's financial results in our results of operations, our financial performance will be impacted by the financial performance
of VMware. VMware's financial performance may be affected by a number of factors, including, but not limited to:
rates of customer adoption for virtualization solutions;
fluctuations in demand, adoption, sales cycles and pricing levels for VMware's products and services;
fluctuations in foreign currency exchange rates;
changes in customers' budgets for information technology purchases and in the timing of their purchasing decisions;
VMware's ability to compete with existing or new competitors;
the timing of recognizing revenue in any given quarter which as a result of software revenue recognition policies, can be affected by a number of
factors, including product announcements and beta programs;
the sale of VMware products in the timeframes they anticipate, including the number and size of orders in each quarter;
VMware's ability to develop, introduce and ship in a timely manner new products and product enhancements that meet customer demand,
certification requirements and technical requirements;
VMware's ability to effectively manage future growth and acquisitions;
changes to VMware's effective tax rate;
the increasing scale of VMware's business and its effect on VMware's ability to maintain historical rates of growth;
the timing of the announcement or release of products or upgrades by VMware or by its competitors;
VMware's ability to implement scalable systems of internal controls;
VMware's ability to control costs, including its operating expenses;
VMware's ability to attract and retain highly skilled employees, particularly those with relevant experience in software development and sales;
and
general economic conditions in VMware's domestic and international markets.
Our stock price is volatile and may be affected by the trading price of VMware Class A common stock and/or speculation about the possibility of
future actions we might take in connection with our VMware stock ownership.
Our stock price, like that of other technology companies, is subject to significant volatility because of factors such as:
the announcement of acquisitions, new products, services or technological innovations by us or our competitors;
quarterly variations in our operating results;
changes in revenue or earnings estimates by the investment community; and
speculation in the press or investment community.
The trading price of our common stock has been and likely will continue to be affected by various factors related to VMware, including:
the trading price for VMware Class A common stock;
actions taken or statements made by us, VMware, or others concerning the potential separation of VMware from us, including by spin-off, split-
off or sale; and
factors impacting the financial performance of VMware, including those discussed in the prior risk factor.
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