Motorola 2012 Annual Report Download - page 16

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Item 1A: Risk Factors
We wish to caution the reader that the following important risk factors, and those risk factors described elsewhere in
this report or in our other Securities and Exchange Commission filings, could cause our actual results to differ materially
from those stated in forward-looking statements contained in this document and elsewhere. These risks are not presented in
order of importance or probability of occurrence.
We continue to face a number of risks related to current global economic conditions, including adverse credit conditions, low
economic growth, risk of sovereign defaults and high levels of unemployment, and political conditions that have and could
continue to unfavorably impact our business.
Global economic conditions continue to be challenging for government and enterprise communications markets, as many
economies and financial markets remain in a recession resulting from a number of factors, including adverse credit conditions,
low economic growth rates, risk of sovereign defaults, particularly in certain European countries, continuing high rates of
unemployment and reduced corporate capital spending. Economic growth in the U.S. and many other countries has remained
low and the length of time these adverse economic conditions may persist are unknown. In addition, conflicts in the Middle
East and elsewhere have created many economic and political uncertainties that have impacted worldwide markets. These
global economic and political conditions have impacted and could continue to impact our business in a number of ways,
including:
• Budgeting and Forecasting are Difficult: It is difficult to estimate changes in various parts of the U.S. and
world economy, including the markets in which we participate. Components of our budgeting and forecasting are
dependent upon estimates of demand for our products, the prevailing economic uncertainties render estimates of future
income and expenditures difficult.
• Potential Deferment or Cancellation of Purchases and Orders by Customers: Uncertainty about current and
future global economic conditions may cause, and in some cases has caused businesses and in some cases
governments to defer or cancel purchases in response to tighter credit and decreased cash availability and declining
consumer confidence. If future demand for our products declines due to global economic conditions, it will negatively
impact our financial results.
• Customers' Inability to Obtain Financing to Make Purchases from Motorola Solutions and/or Maintain Their
Business: Some of our customers require substantial financing, including public financing or government grants, in
order to fund their operations and make purchases from us. The inability of these customers to obtain sufficient credit
or other funds to finance purchases of our products and/or meet their payment obligations to us could have, and in
some cases has had, a negative impact on our financial results. In addition, if global economic conditions result in
insolvencies for our customers, it will negatively impact our financial results.
• Requests by Customers for Vendor Financing by Motorola Solutions: Certain of our customers, particularly,
but not limited to, those who purchase large infrastructure systems, request that their suppliers provide financing in
connection with equipment purchases or the provision of managed services. In response to reduced tax revenue at the
state and local government level and ongoing tightening of credit for certain enterprise customers, these types of
requests have increased in volume and scope. Motorola Solutions through its Government segment and in connection
with its global solutions and services offering, has continued to provide customer financing in light of these requests.
We have been faced with and expect to continue to be faced with choosing between further increasing our level of
vendor financing or potentially losing sales to these customers, as some of our competitors, particularly those in Asia,
have been more willing to provide vendor financing to customers around the world, particularly customers in Africa
and Latin America. To the extent we are unable to sell these receivables on terms acceptable to us we will retain
exposure to the credit quality of our customers who we finance.
• Negative Impact from Increased Financial Pressures on Third-Party Dealers, Distributors and Retailers: We
offer our products through a variety of third-party dealers, distributors and retailers. Some of these third-parties are
smaller and more likely to be impacted by the significant decrease in available credit that resulted from the financial
crisis that continues today. If credit pressures or other financial difficulties result in insolvency for third party dealers,
distributors or retailers and we are unable to successfully transition end-customers to purchase our products from other
third parties or from us directly, it may cause, and in some cases has caused, a negative impact on our financial results.
• Negative Impact from Increased Financial Pressures on Key Suppliers: Our ability to meet customers'
demands depends, in part, on our ability to obtain timely and adequate delivery of quality materials, parts and
components, including software from our suppliers. Certain of these items are available only from a single source or
limited sources. If certain single-source or limited-source suppliers were to become capacity constrained or insolvent,
it could result in a reduction or interruption in supplies or an increase in the price of supplies and negatively impact