EMC 2010 Annual Report Download - page 14

Table of Contents
products or services. Some of these companies (whether independently or by establishing alliances) may have substantially greater financial, marketing and
technological resources, larger distribution capabilities, earlier access to customers and greater opportunity to address customers' various IT requirements than
us. In addition, as the IT industry consolidates, companies may improve their competitive position and ability to compete against us. We compete on the basis
of our products' features, performance and price as well as our services. Our failure to compete on any of these bases could affect demand for our products or
services, which could have a material adverse effect on our business, results of operations or financial condition.
Companies may develop new technologies or products in advance of us or establish business models or technologies disruptive to us. Our business may
be materially adversely affected by the announcement or introduction of new products, including hardware and software products and services by our
competitors, and the implementation of effective marketing or sales strategies by our competitors. The material adverse effect to our business could include a
decrease in demand for our products and services and an increase in the length of our sales cycle due to customers taking longer to compare products and
services and to complete their purchases.
We may have difficulty managing operations.
Our future operating results will depend on our overall ability to manage operations, which includes, among other things:
• retaining and hiring, as required, the appropriate number of qualified employees;
• managing, protecting and enhancing, as appropriate, our infrastructure, including but not limited to, our information systems (and such systems'
ability to protect confidential information residing on the systems) and internal controls;
• accurately forecasting revenues;
• training our sales force to sell more software and services;
• successfully integrating new acquisitions;
• managing inventory levels, including minimizing excess and obsolete inventory, while maintaining sufficient inventory to meet customer demands;
• controlling expenses;
• managing our manufacturing capacity, real estate facilities and other assets; and
• executing on our plans.
An unexpected decline in revenues without a corresponding and timely reduction in expenses or a failure to manage other aspects of our operations
could have a material adverse effect on our business, results of operations or financial condition.
Our investment portfolio could experience a decline in market value which could adversely affect our financial results.
We held $5.4 billion in short- and long-term investments as of December 31, 2010. The investments are invested primarily in investment grade debt
securities, and we limit the amount of investment with any one issuer. A further deterioration in the economy, including a tightening of credit markets,
increased defaults by issuers, or significant volatility in interest rates, could cause the investments to decline in value or could impact the liquidity of the
portfolio. If market conditions deteriorate significantly, our results of operations or financial condition could be materially adversely affected.
Our business may suffer if we are unable to retain or attract key personnel.
Our business depends to a significant extent on the continued service of senior management and other key employees, the development of additional
management personnel and the hiring of new qualified employees. There can be no assurance that we will be successful in retaining existing personnel or
recruiting new personnel. The loss of one or more key or other employees, our inability to attract additional qualified employees or the delay in hiring key
personnel could have a material adverse effect on our business, results of operations or financial condition.
Our quarterly revenues and earnings could be materially adversely affected by uneven sales patterns and changing purchasing behaviors.
Our quarterly sales have historically reflected an uneven pattern in which a disproportionate percentage of a quarter's total sales occur in the last month
and weeks and days of each quarter. This pattern makes prediction of revenues, earnings and working capital for each financial period especially difficult and
uncertain and increases the risk of unanticipated variations in quarterly results and financial condition. We believe this uneven sales pattern is a result of many
factors including:
• the relative dollar amount of our product and services offerings in relation to many of our customers' budgets, resulting in long lead times for
customers' budgetary approval, which tends to be given late in a quarter;
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