Support.com 2006 Annual Report Download - page 22

structures, including milestone−based contracts and contracts for a fixed total fee. If unanticipated factors in a project are encountered
and the contract structure prevents us from billing additional amounts, we may be subject to monetary penalties, and the profitably of
our professional services business would suffer. Furthermore, an estimated loss on a contract is generally required to be recorded in
the period in which a loss becomes evident. Recording a loss on a services contract could have a material adverse effect on our
operating results for the period in which the loss was recorded.
Our failure to establish and expand third−party alliances would harm our ability to sell our software and provide our services.
We have alliances with third parties that are important to our business. Our existing relationships include those with hardware
vendors and managed service providers who provide outsourced support to corporate customers. If these relationships fail, we may
need to devote substantially more resources to the sales and marketing of our products and services than we would otherwise, and our
efforts may not be as effective. For example, companies that provide outsourced support and services often have extensive
relationships with our existing and potential customers and significant input in the purchase decisions of these customers. In addition,
we may establish relationships with third party resellers and other sales partners as we expand internationally. Our failure to maintain
existing relationships, or to establish new relationships with key third parties, could significantly harm our ability to sell our products
and services. In addition, our competitors may have strong alliances with other companies, including hardware providers, which could
impact our ability to obtain greater market share, participate in deals where hardware and software are sold together, or require us to
reduce the price of products and services, which could harm our business, prospects, financial condition and operating results.
Our consumer offerings require us to establish and maintain relationships with third parties who will direct consumers to us and
provide technology support services to consumers based on our technology, as well as with third parties to whom we outsource our
call center services. Failure to establish or maintain these relationships on acceptable terms or at all could materially and adversely
affect the success of this initiative.
We may engage in investments or acquisitions or other strategic matters that could divert management attention and prove
difficult to integrate with our business.
We may engage in acquisitions of other companies, products or technologies or in other strategic initiatives. If we fail to integrate
successfully any future acquisitions, the operating results of the combined company could decline. The process of integrating
businesses, technologies, services or products may result in unforeseen operating difficulties and expenditures. Acquisitions involve a
number of other potential risks to our business, including the following:
• unanticipated costs and liabilities and unforeseen accounting charges or fluctuations;
• delays and difficulties in delivery of products and services from the combined company;
• failure to integrate management information systems, personnel, research and development, marketing, sales and support
operations;
• loss of key employees;
• diversion of management’s attention from other business concerns and disruption of our ongoing business;
• difficulty in maintaining controls and procedures;
• uncertainty on the part of our existing customers about our ability to operate on a combined basis;
• loss of customers;
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Source: SUPPORTSOFT INC, 10−K, March 16, 2007