VMware 2014 Annual Report Download - page 31

Table of Contents
If we are unable to successfully address the challenges of integrating offerings based upon open source technology into our business, our
ability to realize revenues from such offerings will be negatively affected and our development costs may increase.
Acquisitions could disrupt our business, cause dilution to our stockholders and harm our business, financial condition and results of
operations.
We have acquired in the past and plan to acquire in the future other businesses, products or technologies. Acquisitions can involve
significant risks and uncertainties, which include:
Additionally, 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. If our acquisitions do not meet our expectations, or if our strategic focus
subsequently changes, we may choose to abandon certain acquired product lines and divest from acquired businesses. For example, in 2013, we
divested certain business activities, including SlideRocket, Shavlik, and Zimbra. It is generally difficult for an acquirer to completely recover the
cost of an acquisition which is subsequently divested. Accordingly, divestitures of acquired businesses and products may result in us taking
charges for impairment of assets and goodwill, and result in cash expenditures in connection with headcount reductions.
The risks described above may be exacerbated as a result of managing multiple acquisitions at the same time. 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.
In addition to business acquisitions, we also seek to invest in businesses such as venture financed companies and joint ventures that offer
complementary products, services or technologies. These investments are accompanied by risks similar to those encountered in an acquisition of
a business. Additionally, we do not control entities where we have a minority investment, and therefore cannot ensure that these investments and
joint ventures will make decisions that promote or are complementary to our business strategy.
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• Actions to protect and maintain ownership and control over our intellectual property could adversely affect our standing in the open
source community, which in turn could limit our ability to continue to rely on this community, upon which we are dependent, as a
resource to help develop and improve our open source products and services.
• disrupting our ongoing operations, diverting management from day-to-day responsibilities, increasing our expenses, and adversely
impacting our business, financial condition and results of operations;
•
failure of the acquired business to further our business strategy;
• uncertainties in achieving the expected benefits of an acquisition, including enhanced revenues, technology, human resources, cost
savings, operating efficiencies and other synergies;
•
reducing cash available for operations, stock repurchase programs and other uses and resulting in potentially dilutive issuances of equity
securities or the incurrence of debt;
•
incurring amortization expense related to identifiable intangible assets acquired that could impact our operating results;
•
difficulty integrating the operations, systems, technologies, products and personnel of the acquired businesses effectively;
•
retaining and motivating key personnel from acquired companies;
• assuming the liabilities of the acquired business, including acquired litigation-related liabilities, and potential litigation arising from a
proposed or completed acquisition;
• maintaining good relationships with customers or business partners of the acquired business or our own customers as a result of any
integration of operations;
• product liability, customer liability or intellectual property liability associated with the sale of the acquired business’
s products;
• unidentified issues not discovered during the diligence process, including issues with the acquired business’s intellectual property,
product quality, security, privacy practices, accounting practices or legal contingencies;
•
maintaining or establishing acceptable standards, controls, procedures or policies with respect to the acquired business; and
•
risks relating to the challenges and costs of closing a transaction.