Support.com 2005 Annual Report Download - page 17

transitioning from his role as our Vice President of Finance which he has held since 2004. We have also recently initiated reductions
in our workforce. Reductions in our workforce as well as changes in senior management could make it difficult to motivate and retain
remaining key employees or attract new employees, and provide distractions affecting our ability to manage our business.
We were not profitable for the third quarter of 2005 and may not continue to be profitable.
Although we have been profitable on an annual basis since 2003, we were not profitable for the third quarter of 2005. We
reached profitability again in the fourth quarter of 2005, but our expenditures could once again exceed our revenues in future periods,
thus preventing us from achieving or maintaining profitability on a quarterly or annual basis. To achieve and maintain profitability,
we will need to generate and sustain substantially higher revenues while maintaining reasonable cost and expense levels. If we fail to
achieve or maintain profitability, the market price of our common stock will likely decline. We may not achieve profitability if our
revenues do not increase or if they increase more slowly than we expect. In addition, our operating expenses are largely fixed and any
shortfall in anticipated revenues in any given period could harm our results.
Our product innovations may not achieve the market penetration necessary for us to expand our market share.
If we fail to develop enhanced versions of our real-time service management software in a timely manner or to provide products
and services that achieve rapid and broad market acceptance, we may not maintain or expand our market share. We may fail to
identify new product and service opportunities for our current market or new markets that we enter into in the future. In addition, our
existing products may become obsolete if we fail to introduce new products or product enhancements that meet new customer
demands, support new standards or integrate with new or upgraded versions of packaged applications. We have limited control over
factors that affect market acceptance of our product and services, including:
• the willingness of enterprises, including management service providers, to transition to real-time service management
solutions; and
If the growth of demand for triple play services or multi-play services by subscribers of digital services does not continue, our
ability to increase our revenue could suffer.
• acceptance of competitors’ solutions or other similar technologies.
Our ability to increase our revenue will depend on increased demand for digital services. If this demand does not grow as rapidly
or to the extent we anticipate, our business could suffer. The growth of digital services is uncertain and will depend in particular upon
the availability, at a reasonable price, of such digital services, the building of infrastructure to support such services, the availability o
f
competitive products, and the reliability of such services.
We are becoming increasingly more dependent upon our international operations and if our revenue from this effort does not
exceed the expense of establishing and maintaining international operations, our business could suffer.
We are becoming increasingly more dependent upon our international operations including the sales and distribution of our
products and services and our research and development resources in India and Canada. We have limited experience in international
operations and may not be able to compete effectively in international markets or effectively manage our operations in various
countries. If we do not generate enough revenue from international operations to offset the expense of these operations, our business
and our ability to increase revenue and enhance our operating results could suffer. Risks we face in conducting business
internationally include:
• costs of staffing and managing international operations;
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• differing technology standards and legal considerations;