VMware 2010 Annual Report Download - page 27

Table of Contents
Our ability to sell our products is dependent on the quality of our support and services offerings, and our failure to offer high-
quality support
and services could have a material adverse effect on our sales and results of operations.
Once our products are integrated within our customers’ hardware and software systems, our customers may depend on our support
organization to resolve any issues relating to our products. A high level of support is critical for the successful marketing and sale of our
products. If we or our channel partners do not effectively assist our customers in deploying our products, succeed in helping our customers
quickly resolve post-deployment issues, and provide effective ongoing support, our ability to sell our products to existing customers would be
adversely affected, and our reputation with potential customers could be harmed. If our customers with ELAs have a poor perception of our
support and services offerings, they may choose not to renew their ELAs when they expire. In addition, as we expand our operations
internationally, our support organization will face additional challenges, including those associated with delivering support, training and
documentation in languages other than English. As a result, our failure to maintain high-quality support and services, or to adequately assist our
channel partners in providing high-quality support and services, could result in customers choosing to use our competitors’ products instead of
ours in the future.
Acquisitions could disrupt our business, cause dilution to our stockholders and harm our business, financial condition and results of
operations.
We have in the past and plan in the future to acquire other businesses, products or technologies. For example, since September 2009 we
have completed a number of acquisitions, including acquisitions of SpringSource, Zimbra, certain assets from EMC’s Ionix division and
Integrien. We may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at
all. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, or they may be viewed
negatively by customers, financial markets or investors.
Acquisitions may disrupt our ongoing operations, divert management from day-to-
day responsibilities, increase our expenses and adversely
impact our business, financial condition and results of operations. An acquired business may not deliver the expected results. For example, an
acquisition may not further our strategies or results in expected benefits, which may include benefits relating to enhanced revenues, technology,
human resources, cost savings, operating efficiencies and other synergies. Acquisitions may reduce our cash available for operations and other
uses and could result in an increase in amortization expense related to identifiable intangible assets acquired, potentially dilutive issuances of
equity securities or the incurrence of debt.
Additionally, we have limited historical experience with the integration of acquired companies. There can be no assurance that we will be
able to manage the integration of acquired businesses effectively or be able to retain and motivate key personnel from these businesses. Any
difficulties we encounter in the integration process could divert management from day-to-day responsibilities, increase our expenses and have a
material adverse effect on our business, financial condition and results of operations. We may also face difficulties due to the lack of experience
in new markets, products or technologies or the initial dependence on unfamiliar supply or distribution partners. Other risks related to
acquisitions include the assumption of the liabilities of the acquired business, including litigation-related liabilities.
In addition, we review our amortizable intangible assets annually for impairment, or more frequently, when events or changes in
circumstances indicate the carrying value may not be recoverable, and we are required to test goodwill for impairment at least annually. We may
be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or
amortizable intangible assets resulting from an acquisition or otherwise is determined, resulting in an adverse impact on our results of operations.
In addition to the risks commonly encountered in the acquisition of a business as described above, we may also experience risks relating to the
challenges and costs of closing a transaction. Further, the risks described above may be exacerbated as a result of managing multiple acquisitions
at the same time. We also seek to invest
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