HP 2007 Annual Report Download - page 41

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 current project to consolidate 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 acquire complementary companies or businesses, divest non-core
businesses or assets, enter into strategic alliances and joint ventures and make investments to further our business
(collectively, “business combination and investment transactions”). In order to pursue this strategy successfully, we must
identify suitable candidates for and successfully complete business combination and investment 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 associated with business combination and investment transactions can be more pronounced for
larger and more complicated transactions or if multiple transactions are integrated simultaneously. If we fail to identify and
complete successfully business combination and investment transactions that further our strategic objectives, we may be
required to expend resources to develop products and technology internally, we may be at a competitive disadvantage or we
may be adversely affected by negative market perceptions, any of which may have a material adverse effect on our revenue,
gross margin and profitability.
Integration issues are complex, time-consuming and expensive and, without proper planning and implementation, could
significantly disrupt our business. The challenges involved in integration include:
• combining product offerings and entering into new markets in which we are not experienced;
• convincing customers and distributors that the transaction will not diminish client service standards or business
focus, preventing customers and distributors from deferring purchasing decisions or switching to other suppliers
(which could result in our incurring additional obligations in order to address customer uncertainty), minimizing
sales force attrition and coordinating sales, marketing and distribution efforts;
• consolidating and rationalizing corporate IT infrastructure, which may include multiple legacy systems from various
acquisitions and integrating software code;
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