Symantec 2001 Annual Report Download - page 29

disruptive to the underlying business of an enterprise and may cause
us to incur higher costs than we anticipate. Failure to manage a
smooth transition to the new systems could result in a material adverse
effect on our business operations.
Our software products and web site may be subject to intentional
disruption. Although we believe we have sufficient controls in place
to prevent intentional disruptions, such as software viruses specifically
designed to impede the performance of our products, we expect to be
an ongoing target of such disruptions. Similarly, experienced computer
programmers, or hackers, may attempt to penetrate our network
security or the security of our web site and misappropriate proprietary
information or cause interruptions of our services. Our activities could
be substantially disrupted and our reputation, and future sales, harmed
if these efforts are successful.
Our markets are highly competitive and our operating results and
financial condition could be adversely affected by this competition.
Our markets are intensely competitive. This competition could
adversely affect our operating results by reducing our sales or the
prices we can charge for our products. Our ability to remain
competitive depends, in part, on our ability to enhance our products
or develop new products that are compatible with new hardware and
operating systems. We have no control over, and limited insight into,
development efforts by third parties with respect to new hardware and
operating systems and we may not be able to respond effectively or
timely to such changes in the market. In addition, we have limited
resources and we must make strategic decisions as to the best alloca-
tion of our resources to position ourselves for changes in our markets.
We may from time to time allocate resources to projects or markets
that do not develop as rapidly or fully as we expect. We may fail to
allocate resources to third party products or to markets that are more
successful than we anticipate.
Introduction of new operating systems may adversely affect our
financial results and stock price. The inclusion of security or virus
protection tools in new operating systems and hardware packages
could adversely affect our sales. For example, the inclusion of features
by Microsoft in new or upcoming versions of Windows, such as
Windows XP, which directly compete with our products may decrease
or delay the demand for certain of our products, including those
currently under development and products specifically intended for
Windows XP. Our financial results and our stock price declined
significantly following the releases of Windows 3.1, Windows 95 and
Windows 98. The release of future editions of Windows, including
Windows XP in our December 2001 quarter, could adversely affect
our financial results and stock price.Additionally, as hardware vendors
incorporate additional server-based network management and security
tools into network operating systems, the demand may decrease for
some of our products, including those currently under development.
Our earnings and stock price are subject to significant fluctuations.
Due to many factors, including those noted in this section, our
earnings and stock price have been and may continue to be subject
to significant volatility. There have been previous quarters in which
we have 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.
Fluctuations in our quarterly operating results have affected our
stock price in the past and could affect our stock price in the future.
If our quarterly operating results fail to meet the expectations of
analysts and investors, the trading price of shares of our common
stock could be negatively affected. Our quarterly operating results have
varied substantially in the past and may vary substantially in the future
depending upon a number of factors, including:
•the timing of announcements and releases of new or enhanced
versions of our products and product upgrades;
•the introduction of competitive products by existing or new
competitors;
•reduced demand for any given product;
•seasonality in the end-of-period buying patterns of foreign and
domestic software markets; and
•the market’s transition between new releases of operating systems.
In addition to the foregoing factors, the risk of quarterly fluctuations is
increased by the fact that a significant portion of our net revenues has
historically been generated during the last month of each fiscal quarter.
Most resellers tend to make a majority of their purchases at the end of
a fiscal quarter. In addition, many enterprise customers negotiate site
licenses near the end of each quarter. In part, this is because these two
groups are able, or believe that they are able, to negotiate lower prices
and more favorable terms at that time. Our reliance on a large portion
of revenue occurring at the end of the quarter and the increase in the
dollar value of transactions that occur at the end of a quarter can result
in increased uncertainty relating to quarterly revenues. Due to this
end-of-period buying pattern, forecasts may not be achieved, either
because expected sales do not occur or because they occur at lower
prices or on terms that are less favorable to us. In addition, these fac-
tors increase the chances that our results could diverge from the
expectations of investors and analysts.
We face risks associated with our foreign operations. A significant
portion of our net revenues, manufacturing costs and operating
expenses result from transactions outside of the United States, often
in foreign currencies.As a result, our future operating results could
be materially and adversely affected by fluctuations in currency
exchange rates and general uncertainty with each country’s political
and economic structure.
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