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The software business: your risk model, should you need one.

I was just going back over Microsoft’s announcement from January when they announced their “cost cutting initiatives” (it was referenced in a friend’s “my last day at Microsoft” email), when I noticed at the bottom the bit about “forward looking statements”.

These sections are usually pretty bland and generic – however, what is fascinating is that Microsoft have actually broken out all of their downside risks into a list for everyone to see: check out the list below. If you’re running a software business and don’t have a risk model, here you go. 😉

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challenges to Microsoft’s business model;

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intense competition in all of Microsoft’s markets;

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Microsoft’s continued ability to protect its intellectual property rights;

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claims that Microsoft has infringed the intellectual property rights of others;

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the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;

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actual or perceived security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;

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government litigation and regulation affecting how Microsoft designs and markets its products;

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Microsoft’s ability to attract and retain talented employees;

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delays in product development and related product release schedules;

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significant business investments that may not gain customer acceptance and produce offsetting increases in revenue;

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changes in general economic conditions or the availability of credit that affect the value of our investment portfolio or demand for Microsoft’s products and services;

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adverse results in legal disputes;

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unanticipated tax liabilities;

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quality or supply problems in Microsoft’s consumer hardware or other vertically integrated hardware and software products;

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impairment of goodwill or amortizable intangible assets causing a charge to earnings;

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exposure to increased economic and regulatory uncertainties from operating a global business;

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geopolitical conditions, natural disaster, cyberattack or other catastrophic events disrupting Microsoft’s business;

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acquisitions and joint ventures that adversely affect the business;

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improper disclosure of personal data could result in liability and harm to Microsoft’s reputation;

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outages and disruptions of online services if Microsoft fails to maintain an adequate operations infrastructure;

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sales channel disruption, such as the bankruptcy of a major distributor; and

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Microsoft’s ability to implement operating cost structures that align with revenue growth.

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