Apple 2008 Annual Report Download - page 24

Table of Contents
The Company may be subject to information technology system failures, network disruptions and breaches in data security.
Information technology system failures, network disruptions and breaches of data security could disrupt the Company’s operations by causing
delays or cancellation of customer, including channel partner, orders, negatively affecting the Company’s online offerings and services,
impeding the manufacture or shipment of products, processing transactions and reporting financial results, resulting in the unintentional
disclosure of customer or Company information, or damage to the Company’s reputation. While management has taken steps to address these
concerns by implementing sophisticated network security and internal control measures, there can be no assurance that a system failure or data
security breach will not have a material adverse effect on the Company’s financial condition and operating results.
The Company’s stock price continues to be volatile.
The Company’s stock has at times experienced substantial price volatility as a result of variations between its actual and anticipated financial
results, announcements by the Company and its competitors, or uncertainty about current global economic conditions. The stock market as a
whole also has experienced extreme price and volume fluctuations that have affected the market price of many technology companies in ways
that may have been unrelated to these companies’ operating performance. Furthermore, the Company believes its stock price reflects high future
growth and profitability expectations. If the Company fails to meet these expectations its stock price may significantly decline.
Political events, war, terrorism, public health issues, natural disasters and other circumstances could materially adversely affect the Company.
War, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause damage or
disruption to international commerce and the global economy, and thus could have a strong negative effect on the Company, its suppliers,
logistics providers, manufacturing vendors and customers, including channel partners. The Company’s business operations are subject to
interruption by natural disasters, fire, power shortages, terrorist attacks, and other hostile acts, labor disputes, public health issues, and other
events beyond its control. Such events could decrease demand for the Company’s products, make it difficult or impossible for the Company to
make and deliver products to its customers, including channel partners, or to receive components from its suppliers, and create delays and
inefficiencies in the Company’s supply chain. Should major public health issues, including pandemics, arise, the Company could be negatively
affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of
products between regions, delays in production ramps of new products, and disruptions in the operations of the Company’s manufacturing
vendors and component suppliers. The majority of the Company’s research and development activities, its corporate headquarters, information
technology systems, and other critical business operations, including certain component suppliers and manufacturing vendors, are located near
major seismic faults. Because the Company does not carry earthquake insurance for direct quake-related losses and significant recovery time
could be required to resume operations, the Company’s financial condition and operating results could be materially adversely affected in the
event of a major earthquake.
The Company’s success depends largely on its ability to attract and retain key personnel.
Much of the Company’s future success depends on the continued service and availability of skilled personnel, including its CEO, its executive
team and key employees in technical, marketing and staff positions. Experienced personnel in the technology industry are in high demand and
competition for their talents is intense, especially in the Silicon Valley, where most of the Company’s key employees are located. The Company
has relied on equity awards as one means for recruiting and retaining this highly skilled talent. Accounting regulations requiring the expensing of
stock options have resulted in increased stock-based compensation expense, which has caused the Company to reduce the number of stock-
based
awards issued to employees and could negatively impact the Company’s ability to attract and retain key personnel. Additionally, significant
adverse volatility in the Company’s stock price could result in a stock option’s exercise price exceeding the underlying stock’s market value or a
significant deterioration in the value of restricted stock units (“RSUs”) granted, thus lessening the
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