Oracle 2010 Annual Report Download - page 26

Table of Contents
outsourcing (BPO) as competitive alternatives to buying software and hardware, and customer interest in SaaS or cloud and BPO solutions is increasing. Some of
these competitors have greater financial or technical resources than we do. Our competitors that offer business applications and middleware products may
influence a customer’s purchasing decision for the underlying database in an effort to persuade potential customers not to acquire our products. We could lose
customers if our competitors introduce new competitive products, add new functionality, acquire competitive products, reduce prices or form strategic alliances
with other companies. Vendors that offer SaaS, cloud or BPO solutions may persuade our customers not to purchase our products. We may also face increasing
competition from open source software initiatives, in which competitors may provide software and intellectual property for free. Existing or new competitors
could gain sales opportunities or customers at our expense.
Our hardware systems offerings are complex products. If we cannot successfully manage the required processes to meet customer requirements and demand
on a timely basis, the results of our hardware systems business will suffer. Designing, developing, manufacturing and introducing new hardware systems
products are complicated processes. The development process is uncertain and requires a high level of innovation from both systems hardware and software
product designers and engineers and the suppliers of the components used in these products. The development process is also lengthy and costly. Once a new
hardware systems product is developed, we face several challenges in the manufacturing process. We must be able to forecast customer demand and manufacture
new hardware systems products in sufficient volumes to meet this demand and do so in a cost effective manner. Our “build-to-order” manufacturing model, in
which our hardware systems products are not fully assembled until after customers place orders, may from time to time experience delays in delivering our
hardware systems products to customers in a timely manner. These delays could cause our customers to purchase hardware products and services from our
competitors. We must also manage new hardware product introductions and transitions to minimize the impact of customer delayed purchases of existing
hardware systems products in anticipation of new hardware systems product releases. Because the design and manufacturing processes for components are also
very complicated, it is possible that we could experience design or manufacturing flaws. These design or manufacturing flaws could delay or prevent the
production of the components for which we have previously committed to pay or need to fulfill orders from customers. These types of component flaws could
also prevent the production of our hardware products or cause our hardware products to be returned, recalled or rejected resulting in lost revenues, increases in
warranty costs or costs related to remediation efforts, damage to our reputation, penalties and litigation.
Acquisitions present many risks, and we may not realize the financial and strategic goals that were contemplated at the time of a transaction. In recent
years, we have invested billions of dollars to acquire a number of companies, products, services and technologies. An active acquisition program is an important
element of our overall corporate strategy, and we expect to continue to make similar acquisitions in the future. Risks we may face in connection with our
acquisition program include:
• our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities;
• an acquisition may not further our business strategy as we expected, we may not integrate an acquired company or technology as successfully as we
expected or we may overpay for, or otherwise not realize the expected return on, our investments, which could adversely affect our business or
operating results;
• we may have difficulties (i) managing an acquired company’s technologies or lines of business or (ii) entering new markets where we have no or
limited direct prior experience or where competitors may have stronger market positions;
• our operating results or financial condition may be adversely impacted by claims or liabilities that we assume from an acquired company or
technology or that are otherwise related to an acquisition, including claims from government agencies, terminated employees, current or former
customers, former stockholders or other third parties; pre-existing contractual relationships of an acquired company that we would not have
otherwise entered into, the termination or modification of which may be costly or disruptive to our business; unfavorable revenue recognition or
other accounting treatment as a result of an acquired company’s practices; and intellectual property claims or disputes;
22
Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research℠