TeleNav 2013 Annual Report Download - page 33

Table of Contents
functionality for services they have already purchased. Any of the foregoing could harm our business, operating results and financial condition.
We cannot control the quality standards of our wireless carrier customers, their mobile phone providers and other technology customers. We
cannot guarantee that the mobile phones are free from errors or defects. If errors or defects occur in mobile phones or services offered by our wireless
carrier customers, it could result in consumers terminating our services, damage to our reputation, increased customer service and support costs,
warranty claims, lost revenue and diverted development resources, any of which could adversely affect our business, results of operations and
financial condition.
Mergers, consolidations or other strategic transactions in the wireless communications industry could weaken our competitive position, reduce
the number of our map providers and adversely affect our business.
The mapping data industry continues to experience consolidation. Should one of our map providers consolidate or enter into an alliance with
another navigation provider, this could have a material adverse impact on our business. Currently, two of our map suppliers are owned by
competitors in the navigation space and recently Waze, which utilized open street map data, was acquired by Google. Such a consolidation may
cause us to lose a map supplier or require us to increase the royalties we pay to map vendors as a result of enhanced supplier leverage, which would
have a negative effect on our business. We may not be able to expand our map suppliers to offset increases in our cost of goods if we lose a map data
supplier.
Reduced expenditures for mobile phones, wireless services or new vehicles due to adverse or uncertain economic conditions may negatively affect
our business and results of operations.
Recent adverse economic conditions and future uncertainties may directly affect the marketing and distribution of mobile phones and our
navigation services by our wireless carrier customers and purchase of our automobile manufacturer customer’s new vehicles. As current and future
conditions in the domestic and global economies remain uncertain, it is difficult to estimate the level of economic growth, which may cause some
wireless carriers to emphasize marketing basic voice services rather than data services, such as mobile navigation services. In addition, subscribers
may try to reduce their monthly expenses by reducing spending on discretionary wireless services, such as ours. In addition, with an increasing
percentage of our revenue coming from automobile navigation products purchased in connection with the purchase of a new vehicle, we may
experience a decline in revenue if spending on new vehicles is impacted due to economic conditions. Accordingly, the future direction of the overall
domestic and global economies will have an impact on our overall performance. Economic conditions are beyond our control. If these economic
conditions worsen or fail to improve, we may experience reduced demand for and pricing pressure on our navigation services, which could harm our
operating results.
Changes in business direction and market conditions could lead to charges related to structural reorganization and discontinuation of certain
products or services, which may adversely affect our financial results.
In response to changing market conditions and the desire to focus on new and more potentially attractive opportunities, we may be required to
strategically realign our resources and consider restructuring, eliminating, or otherwise exiting certain business activities. For example, in April 2013,
we sold our enterprise business to a third party, which resulted in a net gain to us but also required us to provide transition services to the buyer. In
connection with the sale of our enterprise business, we terminated seven employees who were not offered positions by the buyer and we incurred
severance costs as a result. Any decision to reduce investment in, dispose of, or otherwise exit business activities may result in the recording of
special charges, such as workforce reduction and excessive facility space costs.
Risks related to our intellectual property and regulation
We operate in an industry with extensive intellectual property litigation. Claims of infringement against us, our customers, or other business
partners may cause our business, operating results and financial condition to suffer.
Our commercial success depends in part upon us, our partners and our customers not infringing intellectual property rights owned by others and
being able to resolve claims of intellectual property infringement without major financial expenditures and/or need to alter our technologies or cease
certain activities. We operate in an industry with extensive intellectual property litigation and it is not uncommon for our wireless carrier customers,
handset manufacturing partners, automobile manufacturers and OEMs and competitors to be involved in infringement lawsuits by or against third
parties. Many industry participants that own, or claim to own, intellectual property aggressively assert their rights, and our customers and other
business partners, who we agree in certain circumstances to indemnify for intellectual property infringement claims related to our services, are often
targets of such assertions. We cannot determine with certainty whether any existing or future third party intellectual property rights would require us
to alter our technologies, obtain licenses or cease certain activities.
We have received, and may in the future receive, claims from third parties alleging infringement and other related claims. As of the date of this
Annual Report on Form 10-
K, we were named as a defendant in several cases alleging that our services infringe other parties' patents, as well as other
matters. See Part I, Item 3, “Legal Proceedings,” for a description of these matters. These cases and future litigation may make it necessary to defend
ourselves and our customers and other business
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