Oracle 2008 Annual Report Download - page 24

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Table of Contents
• the functionality of products overlap;
• the use and support of third-party code (including open source code) becomes more prevalent in the
software industry; and
• the volume of issued software patents continues to increase.
Responding to any such claim, regardless of its validity, could:
• be time consuming, costly and result in litigation;
• divert management’s time and attention from developing our business;
• require us to pay monetary damages or enter into royalty and licensing agreements that we would not
normally find acceptable;
• require us to stop selling or to redesign certain of our products;
• require us to release source code to third parties, possibly under open source license terms;
• require us to satisfy indemnification obligations to our customers; or
• otherwise adversely affect our business, results of operations, financial condition or cash flows.
Specific patent infringement cases are discussed under Note 17 of Notes to Consolidated Financial
Statements.
We may lose key employees or may be unable to hire enough qualified employees. We rely on the
continued service of our senior management, including our Chief Executive Officer and founder, members of
our executive team and other key employees and the hiring of new qualified employees. In the software
industry, there is substantial and continuous competition for highly skilled business, product development,
technical and other personnel. In addition, acquisitions could cause us to lose key personnel of the acquired
companies or at Oracle. We may also experience increased compensation costs that are not offset by either
improved productivity or higher prices. We may not be successful in recruiting new personnel and in
retaining and motivating existing personnel. With rare exceptions, we do not have long-term employment or
non-competition agreements with our employees. Members of our senior management team have left Oracle
over the years for a variety of reasons, and we cannot assure you that there will not be additional departures,
which may be disruptive to our operations.
We continually focus on improving our cost structure by hiring personnel in countries where advanced
technical expertise is available at lower costs. When we make adjustments to our workforce, we may incur
expenses associated with workforce reductions that delay the benefit of a more efficient workforce structure.
We may also experience increased competition for employees in these countries as the trend toward
globalization continues, which may affect our employee retention efforts and/or increase our expenses in an
effort to offer a competitive compensation program. Part of our total compensation program includes stock
options which are an important tool in attracting and retaining employees in our industry. If our stock price
performs poorly, it may adversely affect our ability to retain or attract employees. In addition, because we
expense all stock-based compensation, we may in the future change our stock-based and other compensation
practices. Some of the changes we consider from time to time include a reduction in the number of employees
granted options, a reduction in the number of options granted per employee and a change to alternative forms
of stock-based compensation. Any changes in our compensation practices or changes made by competitors
could affect our ability to retain and motivate existing personnel and recruit new personnel.
We may need to change our pricing models to compete successfully. The intense competition we face in the
sales of our products and services and general economic and business conditions can put pressure on us to
change our prices. If our competitors offer deep discounts on certain products or services or develop products
that the marketplace considers more valuable, we may need to lower prices or offer other favorable terms in
order to compete successfully. Any such changes may reduce margins and could adversely affect operating
results. Our software license updates and product support fees are generally priced as a percentage of our net
new software license fees. Our competitors may offer lower percentage pricing on product updates and
support, which could put pressure on us to further discount our new license prices.
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠