Hypercom Corporation Annual Report - CiteSeer

economic climate, the credit market crisis, particularly the increased difficulty in securing credit, declining consumer and business
confidence, fluctuating commodity prices, and other challenges currently affecting the global economy could impact our ability to sell
and our customers’ ability to make capital expenditures, thereby affecting their ability to purchase our products. Additionally,
customers in the financial services sector, which has been severely impacted by the credit crisis, have consolidated in response to the
crisis, which could further impact our business by reducing our customer base. Certain of our retail customers who have seen
significant dampening of consumer demand, could face increased financial pressures that could impact their capital expenditures.
Also, although we believe that our cash flows from operations and other sources of liquidity, including borrowings available
under our revolving credit facility or other financing options, will satisfy our working capital needs, capital expenditures,
commitments, and other liquidity requirements associated with our operations and our TeT acquisition debt requirement through the
next 12 months, in the event that we require additional capital to fulfill our future business plans, we may need to obtain additional
financing from third parties. In light of the current global credit crisis, if we experience such a need for additional financing, we may
not be able to obtain sufficient financing on advantageous terms or at all, which could materially and adversely affect our business,
financial condition, results of operations and long-term prospects.
The extent of the impact of the global economic crisis depends on a number of factors, including whether and when the U.S.
economy and the global economy generally, will emerge from the severe recession. If the global economic recession continues for a
significant period or there is significant further deterioration in the global economy, our results of operations, financial position and
cash flows could be materially adversely affected.
Our integration of future acquisitions we may make involves numerous risks. We may not be able to address these risks
without substantial expense, delay or other operational or financial problems.
We have in the past and may in the future make acquisitions and strategic investments in related businesses, technologies,
products or services. Acquisitions and investments involve various risks such as the following:
• the inability to assimilate the technologies, operations and personnel of the acquired business;
• the potential disruption of our existing business, including the diversion of management attention and the redeployment of
resources;
• the loss of customers;
• the possibility of our entering markets in which we have limited prior experience;
• the loss of key employees of the acquired business;
• the necessity to respond to and negotiate with local labor unions or other organized labor associations, which may cause
delays with and obstacles to our implementation of business initiatives; and
• the inability to obtain the desired strategic and financial benefits from the acquisition.
Future acquisitions and investments could also result in substantial cash expenditures, potentially dilutive issuance of our equity
securities, our incurrence of additional debt and contingent liabilities, and amortization expenses related to intangible assets that could
adversely affect our business, operating results and financial condition.
Risks Related To The Industry
The markets in which we compete are highly competitive, maturing, and subject to price erosion.
The markets in which we operate are maturing and highly competitive. Increased competition from manufacturers or distributors
of products similar to or competitive with ours, or from service providers that provide services similar to ours, could result in price
reductions, extended terms, free services, lower margins and loss of market share. In some markets, we may sell products with
negative margins to large customers who have existing service contracts that generate contractual services revenues at positive
margins over a multi-year period. Such transactions may negatively affect our revenues, margins and net income.
We expect to continue to experience significant and increasing levels of competition in the future. With respect to our products,
we compete primarily on the basis of security, ease-of-use, product performance, price, features, quality, the availability of application
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