Adobe 2011 Annual Report Download - page 42

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but also presents risks to our business, including the possibilities that we may not be able to impact the quality of support that we
provide as directly as we would be able to do in our own company-run call centers, and that our customers may react negatively
to providing information to, and receiving support from, third-party organizations, especially if based overseas. If we encounter
problems with our third-party customer service and technical support providers, our reputation may be harmed and our revenue
may be adversely affected.
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, flood, 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 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.
A number of factors may affect the market price for our common stock, 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 and developments
in our industry, as well as unusual events such as significant acquisitions, divestitures, 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 compliance with laws and regulations globally which may harm our business.
We are a global company subject to varied and complex laws, regulations and customs domestically and internationally.
These laws and regulations relate to a number of aspects of our business, including trade protection, import and export control,
data and transaction processing security, records management, employee data privacy, corporate governance, employee and third-
party complaints, gift policies, conflicts of interest, employment and labor relations laws, securities regulations and other regulatory
requirements affecting trade and investment. The application of these laws and regulations to our business is often unclear and
may at times conflict. Compliance with these laws and regulations may involve significant costs or require changes in our business
practices that result in reduced revenue and profitability. Non-compliance could also result in fines, damages, criminal sanctions
against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation. We incur
additional legal compliance costs associated with our global operations and could become subject to legal penalties if we fail to
comply with local laws and regulations in U.S. jurisdictions or in foreign countries, which laws and regulations may be substantially
different from those in the U.S. In many foreign countries, particularly in those with developing economies, it is common to engage
in business practices that are prohibited by U.S. regulations applicable to us such as the Foreign Corrupt Practices Act. Although
we implement policies and procedures designed to ensure compliance with these laws, there can be no assurance that all of our
employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, including
those based in or from countries where practices that violate such U.S. laws may be customary, will not take actions in violation
of our internal policies. Any such violation, even if prohibited by our internal policies, could have an adverse effect on our business.
As a global business that generates approximately 50% of our total revenue from sales to customers outside of the Americas,
we are subject to a number of risks, including:
• foreign currency fluctuations;
• changes in government preferences for software procurement;
• international economic, political and labor conditions;
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