Symantec 1999 Annual Report Download - page 39

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Position (“SOP”) 97-2, “Software Revenue Recognition,” and SOP 98-4, “Deferral of the Effective Date of a Provision
of SOP 97-2, Software Revenue Recognition,” respectively, which provide guidance on applying generally accepted
accounting principles in recognizing revenue on software transactions and were effective for Symantec beginning with
the June 30, 1998 quarter. In December 1998, AcSEC issued SOP 98-9, which amends certain provisions of SOP 97-
2 and extends the deferral of the application of certain passages of SOP 97-2 provided by SOP 98-4 until the beginning
of Symantec’s fiscal 2000. Symantec early adopted SOP 98-9 for its financial statements and related disclosures
beginning in the March 1999 quarter. SOP 98-9 did not have a material affect on our results.
The Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” which establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred
to as derivatives) and for hedging activities. SFAS No. 133 will be effective for Symantec at the beginning of the June
2000 quarter for both annual and interim reporting periods. Symantec is evaluating the potential impact of this
accounting pronouncement on required disclosures and accounting practices.
AcSec issued its SOP 98-1, Accounting for Costs of Computer Software Developed For or Obtained for Internal-Use,
under which, qualifying computer software costs incurred during the application development stage are required to be
capitalized and amortized to expense over the software’s estimated useful life. Symantec adopted SOP 98-1 for its
financial statements and related disclosures in fiscal 1999. SOP 98-1 did not materially affect our results.
BUSINESS RISK FACTORS
The following discussion contains forward-looking statements that involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially
different from any future results, levels of activity, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among others things, those risk factors set forth in this section and
elsewhere in this report. We identify forward-looking statements by words such as “may,” “will,” “should,” “could,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or similar terms that
refer to the future. We cannot guarantee future results, levels of activity, performance or achievements.
Our earnings and stock price are subject to significant fluctuations. Due to the factors noted below, our earnings
and stock price have been and may continue to be subject to significant volatility, particularly on a quarterly basis. We
have previously experienced shortfalls in revenue and earnings from levels expected by securities analysts and
investors, which have had an immediate and significant adverse effect on the trading price of our common stock. This
may occur again in the future.
Our industry is characterized by rapid technological change and we will need to adapt our development to these
changes. We participate in a highly dynamic industry characterized by rapid change and uncertainty related to new and
emerging technologies and markets. The recent trend toward server-based applications in networks and applications
distributed over the Internet could have a material adverse affect on sales of our products. Future technology or market
changes may cause certain of our products to become obsolete more quickly than expected.
The use of a Web browser, running on either a PC or network computer, to access client/server systems is emerging as
an alternative to traditional desktop access through operating systems that are resident on personal computers. If the
functionality associated with this type of system access reduces the need for our products, our future net revenues and
operating results could be adversely affected.
The market for our products is intensely competitive and we expect that competition will continue and may
increase. The microcomputer software market is intensely competitive and is subject to rapid changes in technology.
It is influenced by the strategic direction of major microcomputer hardware manufacturers and operating system
providers. Our competitiveness depends on our ability to enhance existing products and to offer successful new
products on a timely basis. We have limited resources and must restrict product development efforts to a relatively
small number of projects. See Item 1: Business-Competition, for examples of key competitors for our products in each of
our business units.
Many of our existing and potential competitors have greater financial, marketing and technological resources than we
do. We believe that competition in the industry will continue to intensify as most major software companies expand
their product lines into additional product categories.