Tech company nightmares

The study also found that tech companies seem to be more worried about risks associated with international operations (85 percent) than the struggling U.S. economy (73 percent).

BDO Seidman’s "2008 BDO Seidman RiskFactor Report for Technology Businesses," examined the risk factors listed in fiscal 2007 10-K U.S. Securities and Exchange Commission (SEC) filings of the largest 100 publicly-traded U.S. technology companies. Those included in the research range from software, hardware and telecom to Internet and IT services companies.

The risk factors listed in the SEC filings often revealed issues that managers are stressing to shareholders as high-priority issues requiring immediate attention.

Doug Sirotta, a partner in BDO Seidman’s technology practice, said the findings were an "affirmation of what we already knew," adding "as tech companies move their business internationally, we get questions all the time about local regulations, tax, M&A and the impact of their outsourcing."

Sirotta also said many tech companies are alarmed by issues relating to intellectual property infringement, legal proceedings, supplier and vendor quality and product liability.

BDO Seidman’s top 20 risk factors for the 100 largest U.S. technology companies were:

1. Competition and consolidation in technology sector (92 percent).

2. Changes to federal, state and local regulations, including tax (87 percent).

3. Management of current and future mergers and acquisitions or divestitures (86 percent).

4. Risks associated with international operations (85 percent).

5. Inability to develop or market new products and services (84 percent).

6. Intellectual property infringement (84 percent).

7. U.S. general economic conditions (73 percent).

8. Inability to attract or retain personnel, including management (72 percent).

9. Pressures on pricing, margins and cost cutting (71 percent).

10. Legal proceedings (70 percent).

11. Cyclical revenue (and subsequent fluctuating stock price) (69 percent).

12. Product liability, quality and safety issues (68 percent).

13. U.S. and foreign supplier and vendor concerns (68 percent).

14. Inability to acquire capital or financing (66 percent).

15. Predicting customer demand (65 percent).

16. Financial risk of customers (58 percent).

17. Failure to properly execute corporate growth strategy (52 percent).

18. Changes to accounting standards and regulations (47 percent).

19. Internal controls and Sarbanes-Oxley disclosure compliance (45 percent).

20. Debt (44 percent).

- Junko Yoshida
EE Times