Symantec 2004 Annual Report Download - page 44

«42»SYMANTEC CORPORATION
Demand for our products is subject to seasonal trends, which
could make our stock price more volatile. Although there is no
assurance this trend will continue, our sales of consumer products
have been seasonal, with higher sales generally in our December
and March quarters. To the extent seasonality makes it more difficult
to predict our revenues and value our business, our stock price
may suffer and the volatility of our stock may increase.
Military actions around the globe could create economic
conditions that reduce demand for our products and services
by businesses, consumers and government agencies. Political
and military instability could slow spending within our target markets,
delay sales cycles and otherwise adversely affect our ability to
generate revenue and operate effectively. Government demand
for our products and services is dictated by budgetary cycles and
funding availability and this demand may be adversely affected
by a redirection of spending for military or other objectives.
Our financial forecasts may not be achieved, due to the
unpredictability of end-of-period buying patterns, which could
make our stock price more volatile. The risk of quarterly fluctuations
is increased by the fact that a significant portion of our quarterly
net revenues has historically been generated during the last month
of each fiscal quarter. Most resellers have tended 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. Due to these end-of-period buying patterns, 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. This increases the chances that our results could
diverge from the expectations of investors and analysts, which
could make our stock price more volatile.
Increased reliance on sales of enterprise licenses may result
in greater fluctuations in, or otherwise adversely affect, our
financial results. Sales of enterprise licenses through our Enterprise
Security segment represent a major portion of our business.
Enterprise licensing arrangements involve a longer sales cycle
than sales through other distribution channels, require greater
investment of resources in establishing the enterprise relationship,
may involve greater pricing pressure and sometimes result in
lower operating margins. In addition, the timing of the execution
of volume licenses, or their non-renewal by large customers, could
cause our results of operations to vary significantly from quarter
to quarter and could have a material adverse impact on our results
of operations. In addition, longer license periods impede our ability
to increase prices due to increased costs and may adversely impact
our operating margins.
If we are unable to attract and retain personnel in a competitive
marketplace, the growth and success of our business could
be adversely affected. We believe that our future success will
depend in part on our ability to recruit and retain highly skilled
management, sales, marketing and technical personnel. To
accomplish this, we believe that we must provide personnel with
a competitive compensation package, including stock options.
Increases in shares available for issuance under our stock options
plans require stockholder approval in many cases, and institutional
stockholders, or stockholders generally, may not approve future
increases. Additionally, the FASB proposed a new standard that
would require companies to include compensation expense in their
statement of operations relating to the issuance of employee
stock options. As a result, we may decide to issue fewer stock
options and may be impaired in our efforts to attract and retain
necessary personnel.
We are dependent upon certain partners to distribute our
products and we would be adversely affected if these relation-
ships terminate or diminish. A large portion of our enterprise
sales are made through value-added and other resellers, and
a large portion of our consumer sales are made through the retail
distribution channel. Reliance on these channels subjects us to
events that cause unpredictability in demand. This increases the
risk that we may not plan effectively for the future, which could
result in adverse operating results in future periods. Our distribution
partners may also offer our competitors’ products. Their decisions
to sell our products are partly a function of pricing, terms and
special promotions offered by our competitors and other factors
that we do not control and cannot predict. Our agreements with
partners are generally nonexclusive and may be terminated by them
or by us without cause. We would be adversely affected if companies
in our partner program chose to sell greater amounts of competitive
offerings relative to the amount they sell of our offerings.
In addition, we sell our consumer products through original equip-
ment manufacturers, or OEMs, who bundle our antivirus and other
products with their PCs. We continuously seek to establish new OEM
relationships and, conversely, may encounter OEMs that decide
either to replace third party security software with their own or
switch to a competitor’s product. When we lose an OEM relationship,
our consumer sales could be adversely affected unless and until
we are able to establish new relationships of similar significance.
2004 Annual Report