HP 2006 Annual Report Download - page 30

General or industry-specific market conditions or stock market performance or domestic or
international macroeconomic and geopolitical factors unrelated to HP’s performance also may affect
the price of HP common stock. For these reasons, investors should not rely on recent trends to predict
future stock prices, financial condition, results of operations or cash flows. In addition, following
periods of volatility in a company’s securities, securities class action litigation against a company is
sometimes instituted. If instituted against HP, this type of litigation could result in substantial costs and
the diversion of management time and resources.
System security risks and systems integration issues could disrupt our internal operations or information
technology services provided to customers, and any such disruption could harm our revenue, increase our
expenses and harm our reputation and stock price.
Experienced computer programmers and hackers may be able to penetrate our network security
and misappropriate our confidential information or that of third parties, create system disruptions or
cause shutdowns. In addition, computer programmers and hackers may be able to develop and deploy
viruses, worms, and other malicious software programs that attack our products or otherwise exploit
any security vulnerabilities of our products. As a result, we could incur significant expenses in
addressing problems created by security breaches of our network and any security vulnerabilities of our
products. Moreover, we could lose existing or potential customers for information technology
outsourcing services or other information technology solutions or incur significant expenses in
connection with our customers’ system failures or any actual or perceived security vulnerabilities in our
products. In addition, sophisticated hardware and operating system software and applications that we
produce or procure from third parties may contain defects in design or manufacture, including ‘‘bugs’’
and other problems that could unexpectedly interfere with the operation of the system. The costs to us
to eliminate or alleviate security problems, bugs, viruses, worms, malicious software programs and
security vulnerabilities could be significant, and the efforts to address these problems could result in
interruptions, delays, cessation of service and loss of existing or potential customers that may impede
our sales, manufacturing, distribution or other critical functions.
Portions of our IT infrastructure also may experience interruptions, delays or cessations of service
or produce errors in connection with systems integration or migration work that takes place from time
to time. We may not be successful in implementing new systems and transitioning data, including our
planned consolidation of all of our worldwide IT data centers into six centers, which could cause
business disruptions and be more expensive, time consuming, disruptive and resource-intensive. Such
disruptions could adversely impact our ability to fulfill orders and interrupt other processes. Delayed
sales, lower margins or lost customers resulting from these disruptions have adversely affected in the
past, and in the future could adversely affect, our financial results, stock price and reputation.
Any failure by us to manage, complete and integrate acquisitions, divestitures and other significant
transactions successfully could harm our financial results, business and prospects and may result in
financial results that are different than expected.
As part of our business strategy, we frequently engage in discussions with third parties regarding
possible investments, acquisitions, strategic alliances, joint ventures, divestitures and outsourcing
transactions (‘‘extraordinary transactions’’) and enter into agreements relating to such extraordinary
transactions in order to further our business objectives. In order to pursue this strategy successfully, we
must identify suitable candidates for and successfully complete extraordinary transactions, some of
which may be large and complex, and manage post-closing issues such as the integration of acquired
companies or employees. Integration and other risks of extraordinary transactions can be more
pronounced for larger and more complicated transactions, or if multiple transactions are pursued
simultaneously. If we fail to identify and complete successfully extraordinary transactions that further
our strategic objectives, we may be required to expend resources to develop products and technology
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