Autodesk 2007 Annual Report Download - page 81

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2007 Annual Report
or investment in Hanna Strategies, could negatively impact results of operations for a given period or
cause quarter to quarter variability in our operating results.
If Silicon Graphics, Inc. (SGI), which recently emerged from Chapter 11 bankruptcy protection, fails to deliver
products, provide product upgrades or provide product support, the business relating to our Advanced Systems
products of our Media and Entertainment Segment will be adversely affected.
In the Media and Entertainment Segment, our customers’ buying patterns are heavily influenced by
advertising and entertainment industry cycles, which have resulted in and could have a negative impact on
our operating results. In addition, a reducing but significant percentage of the Media and Entertainment
Segment’s Advanced Systems products rely primarily on workstations manufactured by SGI. On May 8,
2006, SGI announced that it has filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court, and
on October 17, 2006 SGI emerged from Chapter 11 bankruptcy protection. In addition, SGI has changed its
management team and is refocusing its business. Significantly, SGI has recently announced its intention
to cease development of new products for the media and entertainment industry. Although we have
reduced our dependence on SGI workstations for the Advanced Systems products and will continue to do
so in the future, the near term failure of SGI to deliver products, product upgrades or product support in a
timely manner would likely result in an adverse effect upon our financial results for a given period.
Although we offer a range of Media and Entertainment Segment products for use on standard, open,
PC-based Linux platforms, our customers may not choose to adopt our products using these alternative
platforms, or may delay purchases while evaluating the new platforms, which could have a material adverse
effect on our results of operations in a given period.
Our operating results fluctuate within each quarter and from quarter to quarter making our future revenues
and operating results difficult to predict.
Our quarterly operating results have fluctuated in the past and may 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 the timing of the introduction of new products
by us or our competitors, slowing of momentum in upgrade or maintenance revenue, the adoption of SFAS
123R, which required us to record compensation expense for shares issued under our stock plans beginning
in the first quarter of fiscal 2007 with a negative impact on our results of operations, continued fluctuation
in foreign currency exchange rates, 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, failure to convert our 2D customer base to 3D products, delays
in product releases, timing of product releases and retirements, failure to continue momentum of annual
release cycles or to move a significant number of customers from prior product versions in connection
with our programs to retire major products, unexpected outcomes of matters relating to litigation, failure
to achieve continued cost reductions and productivity increases, unanticipated changes in tax rates
and tax laws, distribution channel management, changes in sales compensation practices, the timing of
large systems sales, failure to effectively implement our copyright legalization programs, especially in
developing countries, failure to successfully integrate acquired businesses and technologies, failure to
achieve sufficient sell-through in our channels for new or existing products, the financial and business
condition of our reseller and distribution channels, renegotiation or termination of royalty or intellectual
property arrangements, interruptions or terminations in the business of our consultants or third party
developers, failure to grow lifecycle management or collaboration products, unanticipated impact of
accounting for technology acquisitions and general economic conditions, particularly in countries where
we derive a significant portion of our net revenues.