Citrix 2000 Annual Report Download - page 28

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the Company is unable to add the necessary staff and resources, future
enhancement and additional features to its existing or future products may be
delayed, which may have a material adverse effect on the Company's business,
results of operations and financial condition.
Potential for Undetected Errors
Despite significant testing by the Company and by current and potential
customers, new products may contain errors after commencement of commercial
shipments. Additionally, the Company's products depend upon certain third party
products, which may contain defects and could reduce the performance of the
Company's products or render them useless. Since the Company's products are
often used in mission−critical applications, errors in the Company's products or
the products of third parties upon which the Company's products rely could give
rise to warranty or other claims by the Company's customers.
Reliance Upon Indirect Distribution Channels and Major Distributors
The Company relies significantly on independent distributors and resellers
for the marketing and distribution of its products. The Company does not control
its distributors and resellers. Additionally, the Company's distributors and
resellers are not obligated to purchase products from the Company and may also
represent other lines of products.
Need to Expand Channels of Distribution
The Company intends to leverage its relationships with hardware and
software vendors and systems integrators to encourage them to recommend or
distribute the Company's products. In addition, an integral part of the
Company's strategy is to expand its ability to reach large enterprise customers
by adding channel partners and expanding its offering of consulting services.
The Company is currently investing, and intends to continue to invest,
significant resources to develop these channels, which could reduce the
Company's profits.
Need to Attract Large Enterprise Customers
The Company intends to expand its ability to reach large enterprise
customers by adding channel partners and expanding its offering of consulting
services. The Company's inability to attract large enterprise customers could
have a material adverse effect on its business, operating results and financial
condition. Additionally, large enterprise customers usually request special
pricing and generally have longer sales cycles, which could negatively impact
the Company's revenues. Further, as the Company attempts to attract large
enterprise customers, it may need to increase corporate branding activities,
which will increase the Company's operating expenses, but may not proportionally
increase its operating revenues.
Maintenance of Growth Rate
The Company's revenue growth rate in 2001 may not approach the levels
attained in recent years. The Company's growth during recent years is largely
attributable to the introduction of MetaFrame for Windows in mid−1998 and
WinFrame in late 1995. To the extent revenue growth continues, the Company
believes that its cost of revenues and certain operating expenses will also
increase. Due to the fixed nature of a significant portion of such expenses,
together with the possibility of slower revenue growth, its income from
operations and cash flows from operating and investing activities may decrease
as a percentage of revenues in 2001.
In−Process Research and Development Valuation
The Company has in the past re−evaluated the amounts charged to in−process
research and development in connection with certain acquisitions and licensing
arrangements. The amount and rate of amortization of such amounts are subject to
a number of risks and uncertainties, including, without limitation, the effects
of any changes in accounting standards or guidance adopted by the staff of the
Securities and Exchange Commission or the accounting profession. Any changes in
accounting standards or guidance adopted by the staff of the Securities and
Exchange Commission, may materially adversely affect future results of
operations through increased amortization expense.
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