Google 2007 Annual Report Download - page 43

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have established monitoring controls, if we do not successfully manage our service providers or if the service providers do
not perform satisfactorily to agreed-upon service levels, our operations could be disrupted resulting in advertiser, partner
or employee dissatisfaction. In addition, our business, reputation and operating results could be adversely affected.
To the extent our revenues are paid in foreign currencies, and currency exchange rates become unfavorable, we may
lose some of the economic value of the revenues in U.S. dollar terms.
As we expand our international operations, more of our customers may pay us in foreign currencies. Conducting
business in currencies other than U.S. dollars subjects us to fluctuations in currency exchange rates. If the currency
exchange rates were to change unfavorably, the value of net receivables we receive in foreign currencies and later convert
to U.S. dollars after the unfavorable change would be diminished. This could have a negative impact on our reported
operating results. Hedging strategies, such as forward contracts, options and foreign exchange swaps related to transaction
exposures, that we have implemented or may implement to mitigate this risk may not eliminate our exposure to foreign
exchange fluctuations. Additionally, hedging programs expose us to risks that could adversely affect our operating results,
including the following:
• We have limited experience in implementing or operating hedging programs. Hedging programs are inherently
risky and we could lose money as a result of poor trades.
• We may be unable to hedge currency risk for some transactions or match the accounting for the hedge with the
exposure because of a high level of uncertainty or the inability to reasonably estimate our foreign exchange
exposures.
• We may be unable to acquire foreign exchange hedging instruments in some of the geographic areas where we
do business, or, where these derivatives are available, we may not be able to acquire enough of them to fully
offset our exposure.
• We may determine that the cost of acquiring a foreign exchange hedging instrument outweighs the benefit we
expect to derive from the derivative, in which case we would not purchase the derivative and be exposed to
unfavorable changes in currency exchange rates.
We may have exposure to greater than anticipated tax liabilities.
Our future income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions where we
have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, by changes in the
valuation of our deferred tax assets and liabilities or by changes in tax laws, regulations, accounting principles or
interpretations thereof. Our determination of our tax liability is always subject to review by applicable tax authorities. Any
adverse outcome of such a review could have a negative effect on our operating results and financial condition. In addition,
the determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment, and
there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe our
estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may
materially affect our financial results in the period or periods for which such determination is made.
Risks Related to Ownership of our Common Stock
The trading price for our Class A common stock has been and may continue to be volatile.
The trading price of our Class A common stock has been volatile since our initial public offering and will likely
continue to be volatile. The trading price of our Class A common stock may fluctuate widely in response to various factors,
some of which are beyond our control. These factors include:
• Quarterly variations in our results of operations or those of our competitors.
• Announcements by us or our competitors of acquisitions, new products, significant contracts, commercial
relationships or capital commitments.
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