Symantec 2006 Annual Report Download - page 25

If we fail to manage our sales and distribution channels successfully, these channels may conflict with one
another or otherwise fail to perform as we anticipate, which could reduce our sales and increase our expenses
as well as weaken our competitive position. Some of our distribution partners have experienced financial
difficulties in the past, and if our partners suffer financial difficulties in the future, we may have reduced sales
or increased bad debt expense that could adversely affect our operating results. In addition, reliance on
multiple channels subjects us to events that could cause unpredictability in demand, which could increase the
risk that we may be unable to plan effectively for the future, and could result in adverse operating results in
future periods.
We have grown, and may continue to grow, through acquisitions that give rise to risks and challenges
that could adversely affect our future financial results.
We have in the past acquired, and we expect to acquire in the future, other businesses, business units, and
technologies. Acquisitions involve a number of special risks and challenges, including:
‚ Complexity, time, and costs associated with the integration of acquired business operations, workforce,
products, and technologies into our existing business, sales force, employee base, product lines, and
technology
‚ Diversion of management time and attention from our existing business and other business
opportunities
‚ Loss or termination of employees, including costs associated with the termination or replacement of
those employees
‚ Assumption of debt or other liabilities of the acquired business, including litigation related to alleged
liabilities of the acquired business
‚ The incurrence of additional acquisition-related debt as well as increased expenses and working capital
requirements
‚ Dilution of stock ownership of existing stockholders, or earnings per share
‚ Increased costs and efforts in connection with compliance with Section 404 of the Sarbanes-Oxley Act
‚ Substantial accounting charges for restructuring and related expenses, write-off of in-process research
and development, impairment of goodwill, amortization of intangible assets, and stock-based compen-
sation expense
Integrating acquired businesses has been and will continue to be a complex, time consuming, and
expensive process, and can impact the effectiveness of our internal control over financial reporting. For
example, as disclosed in Item 9A in this annual report, our management has identified a material weakness in
our internal control over financial reporting that was largely related to Symantec having insufficient personnel
resources with adequate expertise to properly manage the increased volume and complexity of income tax
matters arising from the acquisition of Veritas.
If our ongoing integration of the Veritas business is not successful, we may not realize the potential
benefits of the acquisition or could undergo other adverse effects that we currently do not foresee. To integrate
acquired businesses, we must implement our technology systems in the acquired operations and integrate and
manage the personnel of the acquired operations. We also must effectively integrate the different cultures of
acquired business organizations into our own in a way that aligns various interests, and may need to enter new
markets in which we have no or limited experience and where competitors in such markets have stronger
market positions.
Any of the foregoing, and other factors, could harm our ability to achieve anticipated levels of profitability
from acquired businesses or to realize other anticipated benefits of acquisitions. In addition, because
acquisitions of high technology companies are inherently risky, no assurance can be given that our previous or
future acquisitions will be successful and will not adversely affect our business, operating results, or financial
condition.
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