Adobe 2010 Annual Report Download - page 45

45
Uncertainty about future economic conditions and other adverse changes in general political conditions in any of the major
countries in which we do business could adversely affect our operating results.
As our business has grown, we have become increasingly subject to the risks arising from adverse changes in domestic
and global economic and political conditions. Uncertainty about future economic and political conditions makes it difficult
for us to forecast operating results and to make decisions about future investments. If economic growth in the U.S. and other
countries slows or does not improve, many customers may delay or reduce technology purchases, advertising spending or
marketing spending. This could result in continued reductions in sales of our products and services, longer sales cycles,
slower adoption of new technologies and increased price competition.
Financial institutions may continue to consolidate or cease to do business which could result in a tightening in the
credit markets, a low level of liquidity in many financial markets, and increased volatility in fixed income, credit, currency
and equity markets. There could be a number of effects from a credit crisis on our business, which could include impaired
credit availability and financial stability of our customers, including our distribution partners and channels. A disruption in
the financial markets may also have an effect on our derivative counterparties and could also impair our banking partners on
which we rely for operating cash management. Any of these events would likely harm our business, results of operations and
financial condition.
Political instability in any of the major countries we do business in would also likely harm our business, results of
operations and financial condition.
Catastrophic events may disrupt our business.
We are a highly automated business and rely on our network infrastructure and enterprise applications, internal
technology systems and our Website for our development, marketing, operational, support, hosted services and sales
activities. In addition, some of our businesses rely on third-party hosted services and we do not control the operation of third-
party data center facilities serving our customers from around the world, which increases our vulnerability. A disruption,
infiltration or failure of these systems or third-party hosted services in the event of a major earthquake, fire, power loss,
telecommunications failure, software or hardware malfunctions, cyber attack, war, terrorist attack, or other catastrophic event
could cause system interruptions, reputational harm, loss of intellectual property, delays in our product development, lengthy
interruptions in our services, breaches of data security and loss of critical data and could prevent us from fulfilling our
customers’ orders. Our corporate headquarters, a significant portion of our research and development activities, certain of our
data centers, and certain other critical business operations are located in the San Francisco Bay Area, which is near major
earthquake faults. We have developed certain disaster recovery plans and certain backup systems to reduce the potentially
adverse effect of such events, but a catastrophic event that results in the destruction or disruption of any of our data centers or
our critical business or information technology systems could severely affect our ability to conduct normal business
operations and, as a result, our future operating results could be adversely affected.
Net revenue, margin or earnings shortfalls or the volatility of the market generally may cause the market price of our stock to
decline.
The market price for our common stock has experienced significant fluctuations and may continue to fluctuate
significantly. The market price for our common stock may be affected by a number of factors, including shortfalls in our net
revenue, margins, earnings or key performance metrics, changes in estimates or recommendations by securities analysts, the
announcement of new products, product enhancements or service introductions by us or our competitors, seasonal variations
in the demand for our products and services and the implementation cycles for our new customers, the loss of a large
customer or our inability to increase sales to existing customers and attract new customers, quarterly variations in our or our
competitors’ results of operations, developments in our industry; unusual events such as significant acquisitions, divestitures
and litigation, general socio-economic, regulatory, political or market conditions and other factors, including factors
unrelated to our operating performance.
We are subject to risks associated with global operations which may harm our business.
We are a global business that generates over 50% of our total revenue from sales to customers outside of the Americas.
This subjects us to a number of risks, including:
• foreign currency fluctuations;
• changes in government preferences for software procurement;
• international economic, political and labor conditions;