Autodesk 2004 Annual Report Download - page 43

factors on future results of operations. If any of the following risks actually occur, our business, financial
condition or results of operations may be adversely impacted, causing the trading price of our common
stock to decline.
Because we derive a substantial portion of our net revenues from a limited number of products, if these products
are not successful, our net revenues will be adversely affected.
We derive a substantial portion of our net revenues from sales of AutoCAD software, including products
based on AutoCAD that serve specific vertical markets, upgrades to those products and products that are
interoperable with AutoCAD. As such, any factor adversely affecting sales of these products, including
product release cycle, market acceptance, product performance and reliability, reputation, price
competition and the availability of third-party applications, would likely harm our operating results.
In the Discreet business, our customers’ buying patterns are heavily influenced by advertising and
entertainment industry cycles, which have resulted in and may continue to have a negative impact on our
operating results. In addition, Discreet’s advanced systems products rely on workstations manufactured by
Silicon Graphics, Inc. (“SGI”). Failure of SGI to deliver products or product upgrades in a timely manner would
likely result in an adverse effect upon our financial results for a given period.
Ouroperating results fluctuatewithin each quarter and fromquarter to quartermaking our future revenues and
operating results difficult to predict.
Our quarterly operating results have fluctuated in the past and are likely to do so in the future. These
fluctuations could cause our stock price to change significantly or experience declines. Some of the factors
that could cause our operating results to fluctuate include, among other things, the timing of the
introduction of new products by us or our competitors, slowing of momentum in upgrade or maintenance
revenue, failure to achieve anticipated levels of customer acceptance of key new applications, unexpected
costs or changes in marketing or other operating expenses, changes in product pricing or product mix,
platform changes, delays in product releases, distribution channel management, changes in sales
compensation practices, the timing of large systems sales and general economic or political conditions,
particularly in countries where we derive a significant portion of our net revenues.
We have also experienced fluctuations in operating results in interim periods in certain geographic
regions due to seasonality or regional economic conditions. In particular, our operating results in Europe
during the third quarter are usually impacted by a slow summer period, and the Asia Pacific operations
typically experience seasonal slowing in the third and fourth quarters. Operating expenses may also
increase in periods when major product releases occur.
Additionally, our operating expenses are based in part on our expectations for future revenues and are
relatively fixed in the short term. Accordingly, any revenue shortfall below expectations could have an
immediate and significant adverse effect on our profitability. Further, gross margins may be adversely
affected if our sales of AutoCAD LT, upgrades and systems products, which historically have had lower
margins, grow at a faster rate than sales of our higher-margin products.
General economic conditions may affect our net revenues and harm our business.
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. If economic growth in the United States
and other countries’ economies is slowed, many customers may delay or reduce technology purchases. This
could result in reductions in sales of our products, longer sales cycles, slower adoption of new technologies
and increased price competition. In addition, weakness in the end-user market could negatively affect the
cash flow of our distributors and resellers who could, in turn, delay paying their obligations to us, which
would increase our credit risk exposure. Any of these events would likely harm our business, results of
operations and financial condition.
33