Support.com 2008 Annual Report Download - page 22

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Table of Contents
corporate customers generally involves a significant commitment of capital and other resources by a customer. This commitment often requires significant
technical review, assessment of competitive products and approval at a number of management levels within a customer’s organization. While our Enterprise
customers are evaluating our products and services, we may incur substantial sales and marketing expenses and spend significant management effort to complete
these sales. Any delay in completing sales in a particular quarter or the failure to complete a sale after expending resources during the sales cycle could cause our
operating results to suffer.
We may be unable to sustain Segment Operating Profitability in our Enterprise segment if we do not manage costs effectively.
One of our goals for 2009 is to deliver Segment Operating Profitability in our Enterprise segment. Our ability to do so is heavily dependent on our ability
to manage costs, including costs of professional services, licenses and maintenance. Our ability to maintain Segment Operating Profitability will also be
hampered to the extent that our Enterprise revenue decreases, including due to macroeconomic factors. The cost of delivering our professional services is
expensive and if unanticipated factors in a project are encountered, we may be subject to monetary and other significant penalties, and the operating results from
our Enterprise business would suffer. While substantially smaller than the cost of professional services, our costs of license and costs of maintenance
nevertheless represent an important portion of the Enterprise segment’s costs. If we do not manage these costs in line with our revenue, the Enterprise segment’s
operating performance would deteriorate. In addition, if we are unable to manage costs in our Enterprise segment for research and development or sales and
marketing, our Enterprise segment may not be able to sustain Segment Operating Profitability.
If our revenue from our international operations does not exceed the expense of establishing and maintaining international operations, our business
would suffer.
For the years ended December 31, 2008, 2007 and 2006, international revenue was 23%, 24% and 23% of our total revenue, respectively. We may not be
able to compete effectively in international markets or effectively manage our operations in various countries, including our relatively new Consumer operations.
We must make significant investments ahead of revenue in order to launch new programs, and these costs may be higher outside North America. If we do not
generate enough revenue from international operations to offset the expense of these operations in either segment, our operating results would suffer. Risks we
face in conducting business internationally include:
• Expenses related to and difficulties in staffing and managing international operations, including managing a geographically dispersed workforce in
compliance with diverse local laws and customs;
• Changes in currency exchange rates and controls;
• Localization of our products, services, and end user terms;
• Competition from local providers who may have lower costs and more familiarity with local markets;
• Compliance with a variety of complex laws and treaties, including unexpected changes in (or new) legislative or regulatory requirements;
• Differing technology standards, intellectual property protections, consumer protection and data privacy standards, and other legal considerations;
• Lower prices for software and services;
• Difficulty in reaching geographically dispersed customers;
• Loss of proprietary information due to piracy, misappropriation or weaker laws regarding intellectual property;
• Longer sales cycles;
• Seasonal trends unique to international markets;
19
Source: SUPPORTSOFT INC, 10-K, March 11, 2009