928753--3/1/2007--BUSINESS_OBJECTS

related topics

{system, service, information}

{stock, price, share}

{property, intellectual, protect}

{product, market, service}

{regulation, change, law}

{provision, law, control}

{operation, international, foreign}

{operation, natural, condition}

{tax, income, asset}

{control, financial, internal}

{acquisition, growth, future}

{personnel, key, retain}

{customer, product, revenue}

{competitive, industry, competition}

{financial, litigation, operation}

{interest, director, officer}

{cost, operation, labor}

{stock, price, operating}

Investors may be unable to compare our results after January 1, 2006 with our results in prior periods due to stock-based compensation expense which may cause our stock price to fall. Our revenues may be unpredictable due to the release of our BusinessObjects XI, release 2, product, and the expected end of life of our separate, existing Business Objects and Crystal Decisions products. If we overestimate revenues and are unable to reduce our expenses sufficiently in any quarter, this could have a negative impact on our quarterly results of operations. We are subject to frequent tax audits, where the ultimate resolution may result in additional taxes. Since we are required to report our consolidated financial results under both the U.S. GAAP and International Financial Reporting Standards ( IFRS ) rules, we may incur increased operating expenses, we may not fulfill the reporting requirements of one or both of these reporting standards, we may be subject to inconsistent determinations with respect to our accounting policies under these standards and investors may perceive our operating results to be drastically different under these regimes. Changes to current accounting policies could have a significant effect on our reported financial results or the way in which we conduct our business. As a result of our adoption of FAS 123R, which requires us to expense all share-based payments awards in our income statement, our net income and earnings per share have been and are expected to continue to be materially adversely affected. Changes in our stock-based compensation policy have adversely affected our ability to attract and retain employees. Our market is highly competitive, which could harm our ability to sell products and services and reduce our market share. Some of our competitors may have greater financial, technical, sales, marketing and other resources than we do. In addition, acquisitions of, or other strategic transactions by our competitors could weaken our competitive position or reduce our revenues. We may pursue strategic acquisitions and investments that could have an adverse effect on our business if they are unsuccessful. We have strategic relationships with Microsoft, IBM, Oracle and Accenture over which we have limited control and which, if terminated, could reduce our revenues and harm our operating results. We depend on strategic relationships and business alliances for continued growth of our business. We sell products only in the business intelligence software market; if sales of our products in this market decline, our operating results will be harmed. If the market in which we sell business intelligence software does not grow as anticipated, our future profitability could be negatively affected. Our SaaS offerings carry a number of risks, some of which may be harmful to our business. Our software may have defects and errors that could lead to a loss of revenues or product liability claims. We may have long sales cycles and may have difficulty providing and managing large scale customer deployments, which could cause a decline or delay in recognition of our revenues and an increase in our expenses. Business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. While we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from recent legislation requiring companies to evaluate internal control over financial reporting. We cannot be certain that our internal control over financial reporting will be effective or sufficient in the future. The software market in which we operate is subject to rapid technological change and new product introductions, which could negatively affect our product sales. Failure to structure our business model properly for mid-market customers could have a material adverse effect on our business and results of operations. We are currently a party to two lawsuits with MicroStrategy. The prosecution of these lawsuits could have a negative impact on our business. Should MicroStrategy prevail, we may be required to pay substantial monetary damages or be prevented from selling some of our products. We are a party to litigation with Vedatech Corporation and its Representative Director, Mani Subramanian, and in the event of an adverse judgment against us, we may have to pay damages, which could adversely affect our financial position and results of operations. We are a party to litigation with Informatica and, in the event of an adverse judgment against us, we may have to pay damages or be prevented from selling some of our products, either of which could adversely affect our financial position and results of operations. We are a party to litigation with Decision Warehouse Consultoria E Importacao Ltda. ( Decision Warehouse ). The prosecution of this lawsuit could have a substantial negative impact on our business. Should Decision Warehouse prevail, we may be required to pay substantial monetary damages. We have committed to undertake certain internal practices in connection with handling of employee information. The protection of our intellectual property rights is crucial to our business and, if third parties use our intellectual property without our consent, our business could be damaged. Third parties have asserted that our technology infringes upon their proprietary rights, and others may do so in the future, which has resulted, and may in the future result, in costly litigation and could adversely affect our ability to distribute our products. Our loss of rights to use software licensed from third parties could harm our business. Our executive officers and key employees are crucial to our business, and we may not be able to recruit, integrate and retain the personnel we need to succeed. We have multinational operations that are subject to risks inherent in international operations. Fluctuations in exchange rates between the euro, the U.S. dollar and the Canadian dollar, as well as other currencies in which we do business, may adversely affect our operating results. Our effective tax rate may increase or fluctuate, which could increase our income tax expense and reduce our net income. Risks Related to Ownership of Our Ordinary Shares or ADSs Provisions of our articles of association and French law could have anti-takeover effects and could deprive shareholders who do not comply with such provisions of some or all of their voting rights. Our Board of Directors recently obtained authority to implement certain anti-takeover measures which may delay or discourage an acquisition of Business Objects. We cannot be certain that these new anti-takeover measures will be efficient. Holders of our shares have limited rights to call shareholders meetings or submit shareholder proposals, which could adversely affect their ability to participate in governance of Business Objects. Interests of our shareholders will be diluted if they are not able to exercise preferential subscription rights for our shares. It may be difficult for holders of our ADSs rather than our ordinary shares to exercise some of their rights as shareholders. Fluctuation in the value of the U.S. dollar relative to the euro may cause the price of our ordinary shares to deviate from the price of our ADSs. We have not declared or paid cash dividends to our shareholders and do not anticipate doing so in the near future. The market price of our shares is susceptible to changes in our operating results and to stock market fluctuations.

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928753--3/1/2007--BUSINESS_OBJECTS_S.A.