TomTom 2007 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2007 TomTom annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

38 BUSINESS RISKS
The global personal navigation market is highly
dynamic and still in the early stages of market
penetration. As a global player in this market, we
lead developments in the industry and continually
adapt to changes in the market place.
In this dynamic business environment, our Company
objectives can be negatively impacted by a variety of
business risks and economic developments.
Revenues, gross margins, profitability, liquidity and
cash flows may fluctuate due to a number of factors.
Through a process of weighing the probability and
impact of identified risks, we establish the factors
and variables that could have a significant impact
on the results, so that we can take steps to
minimise any potentially adverse effects.
Our results of operations or our financial condition
could be materially adversely affected by any
number of these external risk factors. The most
important risks identified are highlighted below, and
should be considered in connection with any
forward-looking statements. There may be risks, not
yet known to us or others, that are currently not
deemed to be material, but that could have a
significant potential financial impact on the
business.
GLOBAL POSITIONING SYSTEM
Our products depend on Global Positioning System
(GPS) satellitetransmissions to provide position
data to our customers. GPS satellites are funded
and maintained by the US government and we have
no control over their maintenance, support or
repair. The free use and availability of GPS signals
remains at the sole discretion of the US
government.
GPS signals are carried on radio frequency bands
specifically allocated on a global basis. Any
reallocation or interference of these bands could
impair the use of our products.
The planned European Galileo positioning system
is an alternative system and complementary to the
US-government owned GPS system. In 2007, the
EU transportation ministers concerned reached
an agreement that Galileo should be operational
by 2013.
INTERNATIONAL EXPANSION
The global nature of our business increases risks
associated with our international operations and
potential future expansion into new international
markets.
Our business operations span five continents and
we therefore face the economic, regulatory, legal
and political risks inherent in having relationships,
operations and sales in a variety of jurisdictions.
Our rapid growth in a relatively short period of time
has placed, and may continue to place, significant
demands and strains on our resources, systems,
internal controls and management.
In order to manage risks related to international
expansion we continuously focus on successful
integration of new personnel and systems in order
to manage our growth.
HUMAN RESOURCES
The success of our business depends upon
attracting, integrating and retaining qualified
personnel in IT, finance, sales, marketing, research
and development, product management, supply
chain management, and other key areas. The loss of
key members of management could have a material
adverse effect on our business. Furthermore, if we
are unable to retain or increase our pool of talented
personnel to keep pace with our overall rate of
growth, our business could suffer.
In order tomitigatethis risk, wehaveimplemented
policies for attracting and retaining staff, which
include management training and career planning.
MARKET AND COMPETITION
The market for satellite navigation products in each
of the geographic markets in which we operate is
highly dynamic and competitive. Convergence in the
Technology, Media, and Telecommunications
industries leads to increased competition and
associated new business opportunities.
There can be no assurance that our products will
compete successfully against current or new
market entrants or competing technologies. Our
markets are characterised by rapid technological
change, which could render our products obsolete
and cause us tomakesubstantial expenditures to
replace our products.
Wemitigatethese risks by investing in the
development of our technology and by focusing on
innovative benefits that enhance the navigation
experience for our customers.