Best Buy 2006 Annual Report Download - page 30

16
We rely heavily on our management information systems
for inventory management, distribution and other
functions. Ifour systems fail toperform these functions
adequately or if weexperience an interruption in their
operation, our business and results of operations could
be materially adversely affected.
The efficient operation of our business is dependent on our
management information systems. We rely heavily on our
management information systems to manage our order
entry, order fulfillment, pricing, point-of-sale and inventory
replenishment processes. The failure of ourmanagement
information systems to perform as we anticipat ecould
disrupt ourbusiness and could result in decreased revenue,
increased overhead costs andexcess or out-of-stock
inventory levels, causing our business andresults of
operations to suffer materially.
A disruption inour relationship with Accenture, who
manages our information technology and human
resources operations, could materially adversely affect
our business and results of operations.
We have engaged Accenture Ltdto manage our
information technology and human resources operations.
We rely heavily on our management information systems for
inventory management, distribution and other functions. We
also rely heavily on human resources support to attract,
develop and retain a sufficient numberof qualified
employees. Any disruption in our relationshipwith
Accenture could result in decreased revenue and increased
overhead costs, causing our business and results of
operations to suffer materially.
Failure to protect the integrity and security of our
customers’ information could expose usto litigation and
materially damage our standing with our customers.
The increasing costs associated with information security —
such as increased investment in technology, the costs of
compliance with consumer protection laws andcosts
resulting from consumer fraud — could cause our business
andresults of operations to suffer materially. Additionally,
the success of our online operations depends upon the
secure transmission ofconfidential information overpublic
networks, including the use of cashless payments. While we
are taking significant efforts to protect customerand
confidential information, there can beno assurance that
advances in computer capabilities, new discoveries in the
field of cryptography or other developments will prevent the
compromise of our customer transaction processing
capabilities and personal data. If any such compromise of
our security were to occur, it could have a material adverse
effect on our reputation, business, operating results and
financial condition and may increase the costs we incur to
protect against such security breaches.
Failure in our pursuit or execution ofnew business
ventures, strategicalliances and acquisitions could have a
material adverseimpact on our business.
Our growth strategy includes expansion via new business
ventures, strategic alliances and acquisitions. While we
employ several different valuation methodologies to assess
apotentialgrowth opportunity, we can give no assurance
that new business ventures and strategic alliances will
positively affect our financial performance. Acquisitions may
result in difficultiesin assimilatingacquiredcompanies, and
may result in the diversion of ourcapital and our
management’s attention from other business issues and
opportunities. We may not beable to integrate companies
that we acquire successfully, including their personnel,
financial systems,distribution, operations and general
operatingprocedures. If we failto integrate acquired
companies successfully, ourbusiness could suffer materially.
We may also encounter challenges in achieving appropriate
internal control over financial reporting in connection with
the integration of an acquired company. In addition,the
integration of any acquired company, and its financial
results, into ours may have a material adverse effect on our
operating results.