EMC 2004 Annual Report Download - page 37

Table of Contents
If our suppliers are not able to meet our requirements, we could have decreased revenues and earnings.
We purchase or license many sophisticated components and products from one or a limited number of qualified suppliers, including some of our
competitors. These components and products include disk drives, high density memory components, power supplies and software developed and maintained
by third parties. We have experienced delivery delays from time to time because of high industry demand or the inability of some vendors to consistently meet
our quality or delivery requirements. If any of our suppliers were to cancel or materially change contracts or commitments with us or fail to meet the quality
or delivery requirements needed to satisfy customer orders for our products, we could lose time-sensitive customer orders, be unable to develop or sell certain
products cost-effectively or on a timely basis, if at all, and have significantly decreased quarterly revenues and earnings, which would have a material adverse
effect on our business, results of operations and financial condition. Additionally, we periodically transition our product line to incorporate new technologies.
The importance of transitioning our customers smoothly to new technologies, along with our historically uneven pattern of quarterly sales, intensifies the risk
that the failure of a supplier to meet our quality or delivery requirements will have a material adverse impact on our revenues and earnings.
Our business could be materially adversely affected as a result of the risks associated with acquisitions and investments.
As part of our business strategy, we seek to acquire businesses that offer complementary products, services or technologies. These acquisitions are
accompanied by the risks commonly encountered in an acquisition of a business, which may include, among other things:
• the effect of the acquisition on our financial and strategic position and reputation
• the failure of an acquired business to further our strategies
• the failure of the acquisition to result in expected benefits, which may include benefits relating to enhanced revenues, technology, human resources,
costs savings, operating efficiencies and other synergies
• the difficulty and cost of integrating the acquired business, including costs and delays in implementing common systems and procedures and costs
and delays caused by communication difficulties or geographic distances between the two companies' sites
• the assumption of liabilities of the acquired business, including litigation-related liabilities
• the potential impairment of acquired assets
• the lack of experience in new markets, products or technologies or the initial dependence on unfamiliar supply or distribution partners
• the diversion of our management's attention from other business concerns
• the impairment of relationships with customers or suppliers of the acquired business or our customers or suppliers
• the potential loss of key employees of the acquired company
• the potential incompatibility of business cultures
These factors could have a material adverse effect on our business, results of operations or financial condition. To the extent that we issue shares of our
common stock or other rights to purchase our common stock in connection with any future acquisition, existing stockholders may experience dilution and our
earnings per share may decrease.
In addition to the risks commonly encountered in the acquisition of a business as described above, we may also experience risks relating to the challenges
and costs of closing a transaction. Further, the risks described above may be exacerbated as a result of managing multiple acquisitions at the same time.
34