Symantec 2004 Annual Report Download - page 45

SYMANTEC CORPORATION «43»
Some distribution partners have experienced financial difficulties in
the past, and may experience them in the future. If these partners
do suffer financial difficulties, we may have reduced sales or increased
write-offs, which would adversely affect our operating results.
If we are unable to effectively adapt to changes in the dynamic
technological environment, our future revenues and operating
results could be adversely affected. We are increasingly focused
on the Internet security market, which, in turn is dependent on
further acceptance and increased use of the Internet. The following
critical issues concerning the use of the Internet remain unresolved
and may affect the market for our products and the use of the
Internet as a medium to distribute or support our software products
and the functionality of some of our products: security; reliability;
cost; ease of use; accessibility; quality of service; and potential
tax or other government regulations.
In addition, new technologies are gaining acceptance. We must
adapt to these changing technological demands. If we are unable
to timely assimilate changes brought about by the Internet and
wireless based environments, our future net revenues and operating
results could be adversely affected.
Our research and development efforts may be more costly
and time-consuming than anticipated and the results may
be unsuccessful, which could adversely impact our financial
results. We will need to continue to incur significant research
and development expenditures in future periods as we strive
to remain competitive. The length of our product development
cycle for new products and product enhancements has frequently
been greater than we originally expected, and we are likely to
experience delays in future product development. In addition, a
portion of our development efforts has not been technologically
successful and certain products have not achieved market accept-
ance. As a result, the products we are currently developing or
may develop in the future may not be technologically successful,
achieve market acceptance or compete effectively with products
of our competitors.
Our products are complex and operate in a wide variety of
computer configurations, which could result in errors or product
failures. Because we offer very complex products, undetected
errors, failures or bugs may occur when they are first introduced
or when new versions are released. Our products often are
installed and used in large-scale computing environments with
different operating systems, system management software and
equipment and networking configurations, which may cause errors
or failures in our products or may expose undetected errors,
failures or bugs in our products. In the past, we have discovered
software errors, failures and bugs in certain of our product offerings
after their introduction and have experienced delays or lost revenues
during the period required to correct these errors. Our customers’
computer environments are often characterized by a wide variety
of standard and non-standard configurations that make pre-release
testing for programming or compatibility errors very difficult and
time-consuming. Despite testing by us and by others, errors, failures
or bugs may not be found in new products or releases after
commencement of commercial shipments. Errors, failures or bugs
in products released by us could result in negative publicity, product
returns, loss of or delay in market acceptance of our products or
claims by customers or others. In addition, if an actual or perceived
breach of network security occurs in one of our end customer’s
security systems, regardless of whether the breach is attributable
to our products, the market perception of the effectiveness of
our products could be harmed. Because the techniques used by
computer hackers to access or sabotage networks change frequently
and may not be recognized until launched against a target, we
may be unable to anticipate these techniques. Alleviating any
of these problems could require significant expenditures of our
capital and resources and could cause interruptions, delays or
cessation of our product licensing, which could cause us to lose
existing or potential customers and would adversely affect results
of operations.
Most of our license agreements with customers contain provisions
designed to limit our exposure to potential product liability claims.
It is possible, however, that these provisions may not prove effective
in limiting our liability.
Product returns may negatively affect our net revenues.
Product returns can occur when we introduce upgrades and new
versions of products or when distributors or retailers have excess
inventories, subject to various contractual limitations. Our return
policy allows distributors, subject to these contractual limitations,
to return purchased products in exchange for new products or
credit towards future purchases. End-users may return our products
for a full refund within a reasonably short period from the date
of purchase. Future returns could exceed the reserves we have
established for product returns, which could have a material adverse
effect on our operating results.
Increased customer demands on our technical support services
may adversely affect our financial results. We may be unable
to respond quickly enough to short-term increases in customer
demand for support services. We also may be unable to modify
the format of our support services to compete with changes in
support services provided by competitors. Further customer demand
for these services, without corresponding revenue could increase
costs and adversely affect our operating results.
2004 Annual Report