EMC 2007 Annual Report Download - page 13

ITEM 1A. RISK FACTORS
This Annual Report on Form 10-K contains forward-looking statements, within the meaning of the Federal securities laws, about our business and
prospects. The forward-looking statements do not include the potential impact of any mergers, acquisitions, divestitures or business combinations that may be
announced or consummated after the date hereof. Our future results may differ materially from our past results and from those projected in the forward-
looking statements due to various uncertainties and risks, including but not limited to those set forth below, one-time events and other important factors
disclosed previously and from time to time in our other filings with the SEC. We disclaim any obligation to update any forward-looking statements contained
herein after the date of this Annual Report.
The risk factors that appear below could materially affect our business, financial condition and results of operations. The risks and uncertainties
described below are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other
companies.
Our business could be materially adversely affected as a result of general economic and market conditions.
We are subject to the effects of general global economic and market conditions. If these conditions deteriorate, our business, results of operations or
financial condition could be materially adversely affected.
Our business could be materially adversely affected as a result of a lessening demand in the information technology market.
Our revenue and profitability depend on the overall demand for our products and services. Delays or reductions in IT spending, domestically or
internationally, could materially adversely affect demand for our products and services which could result in decreased revenues or earnings.
Our customers operate in a variety of markets, including the financial services, credit and housing and construction markets. Any adverse effects to such
markets could materially adversely affect demand for our products and services which could result in decreased revenues or earnings.
Competitive pricing, sales volume, mix and component costs could materially adversely affect our revenues, gross margins and earnings.
Our gross margins are impacted by a variety of factors, including competitive pricing, component and product design costs as well as the volume and
relative mixture of product and services revenues. Increased component costs, increased pricing pressures, the relative and varying rates of increases or
decreases in component costs and product price, changes in product and services revenue mixture or decreased volume could have a material adverse effect on
our revenues, gross margins or earnings.
The costs of third-party components comprise a significant portion of our product costs. While we generally have been able to manage our component
and product design costs, we may have difficulty managing such costs if supplies of certain components become limited or component prices increase. Any
such limitation could result in an increase in our component costs. An increase in component or design costs relative to our product prices could have a
material adverse effect on our gross margins and earnings. Moreover, certain competitors may have advantages due to vertical integration of their supply
chain, which may include disk drives, microprocessors, memory components and servers.
The markets in which we do business are highly competitive and we encounter aggressive price competition for all of our products and services from
numerous companies globally. There also has been and may continue to be a willingness on the part of certain competitors to reduce prices or provide
information infrastructure and virtual infrastructure products or services, together with other IT products or services, at minimal or no additional cost in order
to preserve or gain market share. Such price competition may result in pressure on our product and service prices, and reductions in product and service prices
may have a material adverse effect on our revenues, gross margins and earnings. We currently believe that pricing pressures are likely to continue.
Our financial performance may be impacted by the financial performance of VMware.
Because we consolidate VMware's financial results in our results of operations, our financial performance will be impacted by the financial performance
of VMware. VMware's financial performance may be affected by a number of factors, including, but not limited to:
rates of customer adoption for virtualization solutions;
fluctuations in demand, adoption, sales cycles and pricing levels for VMware's products and services;
changes in customers' budgets for information technology purchases and in the timing of their purchasing decisions;
VMware's ability to compete with existing or new competitors;
9
•
•
•
•