1082506--9/7/2010--OPENWAVE_SYSTEMS

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Risks Related to Our Business We are in a product transition phase and we may not be able to adequately develop, market or sell new products. We rely upon a small number of customers for a significant portion of our revenues, and the failure to retain and expand our relationships with these customers could adversely affect our business. Consolidation of communication service providers may impair our ability to attract new customers and negotiate favorable business terms. We have a history of losses and we may not be able to achieve or maintain consistent profitability. Our industry changes rapidly as a result of technological and product developments, which may quickly render our products and services less desirable or even obsolete. If we are unable or unsuccessful in supplementing our product offerings, our revenue and operating results may be materially adversely affected. Our customers face implementation and support challenges in introducing Internet-based services, which may slow their rate of adoption or implementation of the services our products enable. Our business depends on continued investment and improvement in communication networks by our customers. Our market is highly competitive and our inability to compete successfully could adversely affect our operating results. Our sales cycles are long, subjecting us to the loss or deferral of anticipated orders and related revenue. Our business is subject to the risks of international operations since we depend on international sales, and any decrease in international sales would adversely affect our operating results. Changes in foreign currency exchange rates could negatively affect our operating results. Our customer contracts lack uniformity and often are particularly complex, which subjects us to business and other risks. We rely on estimates to determine arrangement fee revenue recognition for a particular reporting period. If our estimates change, or our customers do not accept deliverables, future expected revenues could adversely change. Demand for our technology depends in part on operators maintaining a central role in the mobile value chain, and not being circumvented by emerging players who offer services directly to subscribers. We may not be successful in forming or maintaining strategic alliances with other companies, which could adversely affect our product offerings and sales. If our channel partners are unable to successfully market and sell our services to their customers, then our revenues and business may be adversely affected. Our software products may contain defects or errors, which could result in rejection of our products, delays in shipment of our products, failure to meet specific milestones, damage to our reputation, product liability and lost revenues. Our technology could be misappropriated, which may lead to expensive and time-consuming litigation. Our products may infringe the intellectual property rights of others, subjecting us to claims for infringement, payment of license royalties or other damages. We may be unable to effectively manage future growth, if any, that we may achieve. We may pursue acquisitions or investments in complementary technologies and businesses, which could harm our operating results and may disrupt our business. The security provided by our products could be breached, in which case our reputation, business, financial condition and operating results could suffer. Natural or manmade disasters, business interruptions and health epidemics could delay our ability to receive or ship our products, or otherwise disrupt our business. Our business in countries with a history of corruption and transactions with foreign governments, including with government owned or controlled wireless carriers, increases the risks associated with our international activities. Compliance with laws, rules and regulations relating to corporate governance and public disclosure may result in additional expenses. We face litigation risks that could have a material adverse effect on our company. Our investments in marketable securities are subject to market risks which may cause losses and affect the liquidity of these investments. Adverse changes in general economic or political conditions could adversely affect our operating results. Our revolving credit facility with Silicon Valley Bank contains certain restrictive covenants that limit our discretion in the operation of our business, which could have a materially adverse effect on our business, financial condition and results of operations. We depend on recruiting and retaining key management and technical personnel with telecommunications and Internet software experience who are integral in developing, marketing and selling our products. Risks Related to Owning Our Common Stock Our quarterly operating results may fluctuate significantly as a result of factors outside of our control, which could cause the market price of our common stock to decline. Provisions of our corporate documents and Delaware law may discourage an acquisition of our business, which could affect our stock price. Our stock price has been and is likely to continue to be volatile and you may not be able to resell shares of our common stock at or above the price you paid, if at all.

Full 10-K form ▸

1082506--9/7/2010--OPENWAVE_SYSTEMS_INC