While it’s true that many of the financial reports that companies have to file with the U.S. Securities and Exchange Commission can be too complicated or too dull (or both), these documents do contain nuggets of information on what’s worrying the companies most.
One just has to dig a bit.
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That digging informs financial consultancy BDO Seidman’s annual “RiskFactor Report for Technology Businesses.” BDO Seidman trolled through fiscal year 2008 10-K SEC filings of the 100 largest publicly traded U.S. tech companies. (Usually, 10-K reports contain troves of corporate details not found in annual reports.) The risk factors found were analyzed and then ranked in order by the frequency with which they were cited by the high-tech companies.
So what’s eating at high-tech vendors during these troubled economic times?
Strong competition and consolidation risk factors top the list (97 percent cite this; 92 percent did in 2008 when it also ranked highest). Failure to develop new products or services ranks close behind at 91 percent; this ranked fifth last year with 84 percent.
Next on the list: Risks associated with international operations (90 percent), management of current and future M&A or divestitures (86 percent), and intellectual property infringement (86 percent).
Recessionary business concerns (as in, “Why is nobody buying our products?”) came in next. Risks relating to general economic conditions were cited by 85 percent, followed by revenue and stock price volatility (83 percent) and an inability to attract or retain key personnel (82 percent), according to the survey results.
Also notable, some previously unranked risk factors emerged on this year’s list: natural disasters, war, conflicts and terrorist attacks (60 percent) and disruption of distribution of products or services (52 percent).
It’s also interesting how high-tech companies rated the risks associated with their own IT operations and enterprise systems, as in this warning usually found on corporate financial documents: “Like all companies, our information technology systems may be vulnerable to a variety of interruptions due to events that may be beyond our control.”
According to the BDO results, “the inability to maintain operational infrastructure and information systems” came in at 20th (41 percent). Apparently, high-tech companies are quite bullish on their own IT systems.
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