1332245--12/13/2006--Avanade

related topics

{system, service, information}

{condition, economic, financial}

{property, intellectual, protect}

{regulation, government, change}

{cost, operation, labor}

{cost, contract, operation}

{competitive, industry, competition}

{stock, price, operating}

{capital, credit, financial}

{stock, price, share}

{personnel, key, retain}

{investment, property, distribution}

{customer, product, revenue}

{acquisition, growth, future}

The consulting and systems integration and technology markets are highly competitive, and we might not be able to compete effectively. Our business could be adversely affected if our clients are not satisfied with our services. Our results of operations may be affected by the rate of growth in the use of technology in business and the type and level of technology spending by our clients. If we are unable to attract, retain and motivate employees or efficiently utilize their skills, we might not be able to compete effectively and will not be able to grow our business. Our results of operations could be affected by economic and political conditions in the markets in which we operate and the effects of these conditions on our clients businesses and levels of business activity. Our profitability could suffer if we are not able to maintain favorable pricing rates. Our profitability could suffer if we are not able to maintain favorable utilization rates. Our profitability could suffer if we are not able to control our costs. Our work with government clients exposes us to additional risks inherent in the government contracting process. Our global operations are subject to complex risks, some of which might be beyond our control. If we are unable to manage the organizational challenges associated with the expansion of our company, we might be unable to achieve our business objectives. Our business could be negatively affected if we incur legal liability in connection with providing our solutions and services. If our pricing structures do not accurately anticipate the cost and complexity of performing our work, then our contracts could be unprofitable. Our results of operations could be adversely affected if our clients terminate their contracts with us on short notice. If we are unable to collect our receivables our results of operations could be adversely affected. We could be subject to liabilities if our subcontractors or the third parties with whom we partner cannot deliver their project contributions on time or at all. We have only a limited ability to protect our intellectual property rights, which are important to our success. Our services or solutions could infringe upon the intellectual property rights of others, which could result in legal liability, reduced operating income and/or have a materially adverse affect on our ability to operate in the future. There will not be a consistent pattern in our financial results from quarter to quarter, which may result in increased volatility of the value of our stock. Risks That Relate to Our Relationships with Accenture, Microsoft and Their Related Entities Loss of our significant corporate relationships could reduce our revenue and growth prospects. Because we are controlled by Accenture, we have limited ability to set our own independent strategies, and our business strategy and direction may be dictated by Accenture s overall business strategy. We rely on Accenture as a primary source of our liquidity and the loss of that liquidity could have a material adverse impact on our ability to fund our cash needs. We rely on Accenture for the majority of our revenue. The loss of that revenue would have a significant adverse impact on our results of operations and may affect our ability to continue to operate. Our global delivery network relies on Accenture, and the loss of that network would increase our operating expenses. Microsoft has certain minority rights, and may exercise those rights to protect its own interests which may not align with our own. We are committed to using Microsoft-related technologies, and our inability to use those technologies would adversely impact our results of operations. Risks that Relate to Our Employee Put Options All stock issued pursuant to awards granted under our stock option plans is subject to certain put rights, which, if exercised, could have a materially adverse impact on our liquidity.

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1332245--12/13/2006--Avanade_Inc.