Salesforce.com 2004 Annual Report Download - page 46

Table of Contents
We may be required to purchase the interest in our Japanese joint venture held by our joint venture partner, under certain circumstances, on terms
that may not be favorable to us.
In some circumstances, we may be required to purchase the interest of our Japanese joint venture partner. If we default under the terms of our joint
venture agreement with our joint venture partner, or if we and our partner disagree over a course of action proposed for the joint venture entity and the
disagreement continues, then our partner may require that we purchase its interest in the joint venture. In the event we are required to purchase our partner's
interest in the joint venture, we could be forced to make an unanticipated outlay of a significant amount of capital, which could harm our financial condition.
Although the timing and circumstances of any such purchase, were it to be required, are not predictable, if the joint venture were valued based on its most
recent financing, which occurred in September 2003, the buyout price could be as much as approximately $13.0 million.
If we acquire any companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value and
adversely affect our operating results.
We may acquire or make investments in complementary companies, services and technologies in the future. We have not made any acquisitions or
investments to date, and therefore our ability as an organization to make acquisitions or investments is unproven. Acquisitions and investments involve
numerous risks, including:
• difficulties in integrating operations, technologies, services and personnel;
• diversion of financial and managerial resources from existing operations;
• risk of entering new markets;
• potential write-offs of acquired assets or investments;
• potential loss of key employees;
• inability to generate sufficient revenue to offset acquisition or investment costs; and
• delays in customer purchases due to uncertainty.
In addition, if we finance acquisitions by issuing convertible debt or equity securities, our existing stockholders may be diluted which could affect the
market price of our stock. As a result, if we fail to properly evaluate and execute acquisitions or investments, our business and prospects may be seriously
harmed.
Evolving regulation of the Internet may affect us adversely.
As Internet commerce continues to evolve, increasing regulation by federal, state or foreign agencies becomes more likely. For example, we believe
increased regulation is likely in the area of data privacy, and laws and regulations applying to the solicitation, collection, processing or use of personal or
consumer information could affect our customers' ability to use and share data, potentially reducing demand for CRM solutions and restricting our ability to
store, process and share data with our customers. In addition, taxation of services provided over the Internet or other charges imposed by government agencies
or by private organizations for accessing the Internet may also be imposed. Any regulation imposing greater fees for Internet use or restricting information
exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based services, which could harm our business.
Privacy concerns and laws or other domestic or foreign regulations may reduce the effectiveness of our solution and adversely affect our business.
Our customers can use our service to store contact and other personal or identifying information regarding their customers and contacts. Federal, state
and foreign government bodies and agencies, however, have adopted or are considering adopting laws and regulations regarding the collection, use and
disclosure of personal information obtained from consumers and individuals. The costs of compliance with, and other burdens imposed
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