EMC 2005 Annual Report Download - page 13

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Table of Contents
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 shareholders 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.
We also seek to invest in businesses that offer complementary products, services or technologies. These investments are accompanied by risks similar
to those encountered in an acquisition of a business.
We may be unable to keep pace with rapid industry, technological and market changes.
The markets in which we compete are characterized by rapid technological change, frequent new product introductions, evolving industry standards and
changing needs of customers. There can be no assurance that our existing products will be properly positioned in the market or that we will be able to
introduce new or enhanced products into the market on a timely basis, or at all. We spend a considerable amount of money on research and development and
introduce new products from time to time. There can be no assurance that enhancements to existing products and solutions or new products and solutions will
receive customer acceptance. As competition in the IT industry increases, it may become increasingly difficult for us to maintain a technological advantage
and to leverage that advantage toward increased revenues and profits.
Risks associated with the development and introduction of new products include delays in development and changes in data storage, networking
virtualization, infrastructure management and operating system technologies which could require us to modify existing products. Risks inherent in the
transition to new products include:
• the difficulty in forecasting customer preferences or demand accurately
• the inability to expand production capacity to meet demand for new products
• the impact of customers' demand for new products on the products being replaced, thereby causing a decline in sales of existing products and an
excessive, obsolete supply of inventory
• delays in initial shipments of new products
Further risks inherent in new product introductions include the uncertainty of price-performance relative to products of competitors, competitors'
responses to the introductions and the desire by customers to evaluate new products for extended periods of time. Our failure to introduce new or enhanced
products on a timely basis, keep pace with rapid industry, technological or market changes or effectively manage the transitions to new products or new
technologies could have a material adverse effect on our business, results of operations or financial condition.
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