1109935--3/15/2006--WEBEX_COMMUNICATIONS

related topics

{product, market, service}

{system, service, information}

{regulation, change, law}

{property, intellectual, protect}

{stock, price, operating}

{operation, international, foreign}

{product, candidate, development}

{personnel, key, retain}

{acquisition, growth, future}

{customer, product, revenue}

{cost, contract, operation}

{financial, litigation, operation}

{control, financial, internal}

{condition, economic, financial}

The revenue uncertainty associated with one of our two primary pricing models, usage-based pricing, makes our quarterly results variable and difficult to predict, which could cause unpredictable fluctuations in our stock price. There are factors other than usage-based pricing--some within and some not within our control--that make our quarterly results variable and difficult to predict, which could cause unpredictable fluctuations in our stock price. One of our subscription-based offerings, the named host offering, is the choice of an increasing percentage of our subscription-based customers, both new and existing, because of its lower price relative to our other committed subscription offerings. This customer purchasing trend could reduce our revenue unless and until the volume of additional customers makes up the difference. We expect that our operating expenses will continue to increase, and if our revenue does not correspondingly increase, our business and operating results will suffer. Most of our customers do not have long-term obligations to purchase our services; therefore, our revenue and operating results could decline if our customers do not continue to use our services. Our business and operating results may suffer if we fail to establish reseller relationships, if our resellers experience financial hardships, do not successfully market and sell our services, or devote greater efforts to the products and services of competitors, or if we fail to become a significant participant in the telecommunications provider distribution channel. If continuing consolidation within the telecommunications industry causes one or more of our key resellers to significantly curtail or discontinue a reseller arrangement with us, our revenues may be negatively affected. Our total revenue may suffer if we are unable to manage our distribution relationships successfully to prevent the undercutting of our direct sales efforts. We expect to depend on sales of our standalone WebEx Meeting Center service for a significant percentage of our revenue for the foreseeable future. We have modified our business strategy from a narrow focus on web meetings to a more diverse product line of web collaboration services, and if our investments in these new markets are not well targeted or well executed, if overall market growth in these new segments is less than anticipated or if we are unable to compete successfully in these new market segments, our operating results could suffer. If our marketing, branding and lead-generation efforts are not successful, or if our decision to shift resources to sales and marketing from research and development causes service quality problems or delays in the rollout of new services or service upgrades, our business may be harmed. If our services fail to function, whether because of the large number of participants or because of separate quality-related issues, we may lose customers and our business and reputation may be harmed. We rely on our China subsidiary, which exposes us to economic and political risks in China, foreign exchange risk, risks related to political tension between China and the United States, risks arising from an inability to enforce our intellectual property rights, and risks relating to possible Chinese government monitoring of portions of our service delivery operations or infrastructure. Our international business activities expose us to foreign exchange risk, foreign country economic conditions and the challenges of managing a global business operation, any of which if not managed successfully could harm our financial condition. We could incur unexpected costs resulting from claims relating to use of our services. The software underlying our services is complex, and our business and reputation could suffer if our services fail to perform properly due to defects or similar problems with our underlying software. If our services do not work with the many hardware and software platforms used by our customers and end-users, or if we do not successfully adapt our MediaTone on-demand delivery platform to the increasing numbers of customers and varieties of web collaboration services we are developing, our business may be harmed. We rely on third parties for technologies we use in conducting our business, and in certain cases we rely on third parties to provide us with products we include in our set of commercial offerings. If we cannot continue to license these third-party technologies or products in a timely manner and on commercially reasonable terms, our business could suffer. Our recent growth has placed a strain on our infrastructure and resources, and if we fail to manage our future growth to meet customer and distribution partner requirements, both within the U.S. and internationally, our business could suffer. Breaches of our physical or technical security systems, or the security systems of our vendors who partner with us in the delivery of services to customers, may result in violations of our confidentiality and security obligations to our customers, damage to our systems and our reputation, and may endanger the safety of our employees. Changes in our executive management team may be disruptive to our business. If we are unable to attract, integrate and retain qualified personnel, our business could suffer. Interruption or malfunction of our internal business processing systems, including a comprehensive database system upgrade we plan to implement during 2006, could result in customer invoicing delays and other disruptions to our revenue-related financial accounting processes Interruptions in either our internal or outsourced computer and communications systems could reduce our ability to provide our revenue-generating services and could harm our business and reputation. We might have liability for content or information transmitted through our services. Our success depends upon the patent protection of our software and technology. We also rely upon trademarks, copyrights and trade secrets to protect our technology, which may not be sufficient to protect our intellectual property. We may face intellectual property infringement claims that could be costly to defend and result in our loss of significant rights. We may engage in future acquisitions or investments that could dilute the ownership of our existing stockholders, cause us to incur significant expenses, fail to complement our existing revenue models or harm our operating results. We must compete successfully in the web collaboration services market. Competition from Microsoft in the collaboration software and services markets, from other vendors specifically targeted at the low-end market, or customers offering customer- premises products may adversely affect our operating results. Our future success depends on the broad market adoption and acceptance of web collaboration services. Our success depends on the continued growth of web usage and the continued growth in reliability and capacity of the Internet. We face risks associated with government regulation of the Internet, and related legal uncertainties. Current and future economic and political conditions may adversely affect our business. We may experience electrical system failures whether accidentally or intentionally caused, which could disrupt our operations and increase our expenses. We face risks associated with potential future zoning activity relating to our Mountain View network operations center property. Financial Accounting Standards Board (FASB) rules relating to equity-compensation programs, the changes we choose to make in our equity compensation programs in response to the new rules, uncertain analyst and investor response to the new rules, and any changes in current accounting rules that may be enacted in the future may affect our results of operations and cause us to change our business practices While we believe that we currently have adequate internal controls over financial reporting, we are exposed to risks and increased expense from recent legislation requiring companies to evaluate those internal controls Our stock price has been and will likely continue to be volatile because of stock market fluctuations that affect the prices of technology stocks. A decline in our stock price could result in securities class action litigation against us that could divert management s attention and harm our business.

Full 10-K form ▸

1109935--3/15/2006--WEBEX_COMMUNICATIONS_INC