Indian Millennial: January 2014

I came across the financials (10 K reports) of all the major technology companies of the world. Being a finance professional it is interesting to analyse their financials. The following is the list of Risk factors which could adversely affect Google's business in the future based on their own analysis. Yes..... Companies have to submit their Risk factors as per SEC regulations.

Risk Factors
With revenues of more than 50 Billion dollars and cash of around 49 Billion dollars what is the risk which you are getting at, lets look at what they have disclosed in their risk assessment.
"We face intense competition. If we do not continue to innovate and provide products and services that are useful to users, we may not remain competitive, and our revenues and operating results could be adversely affected" - Comment : Yes with Yahoo and other companies like Microsoft continue to make some sort of dent in Googles market share of online advert this is probably the highest risk, not to mentione Yahoo taking Marissa Mayer from them
"Our ongoing investment in new business strategies and new products, services, and technologies is inherently risky, and could disrupt our ongoing businesses" Comment : Seriously this looks like a statement on their Motorola acquisition in 2012 they are trying to state the same without telling the obvious to their shareholders
"We generate a significant portion of our revenues from advertising, and a reduction in spending by or loss of advertisers could seriously harm our business"
"Our revenue growth rate could decline over time, and we anticipate downward pressure on our operating margin in the future." Comment : This has to happen especially with a high market share like Google cause when you have such a significant share and new players coming into the market unless the market expands there is only scope for downward turn in the future
We are subject to increased regulatory scrutiny that may negatively impact our business
"We are regularly subject to claims, suits, government investigations, and other proceedings that may result in adverse outcomes"
"More people are using devices other than personal computers to access the internet and accessing new platforms to make search queries. If manufacturers and users do not widely adopt versions of our web search technology, products, or operating systems developed for these devices, our business could be adversely affected." Comment : This is an amazing point which Google seems to be alluring to.... already ,almost the majority of online consumption happens through mobile phones or tablets and say if Apple with their iOS or Nokia with their Windows OS happens to be a major part of the Online mobile consumption they would be taking all the online ad revenue from google. Excellent foresight on the risks of the changing online habits of the consumers. No wonder they made Android Open source cause lets imagine if Microsoft instead of getting their own phones aggressively went through their marketing of mobile Windows OS then probably we all would be using Bing today
"Our business depends on a strong brand, and failing to maintain and enhance our brand would hurt our ability to expand our base of users, advertisers, Google Network Members, and other partners"
"We are, and may in the future be, subject to intellectual property or other claims, which are costly to defend, could result in significant damage awards, and could limit our ability to use certain technologies in the future."
"Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand."
We may be subject to legal liability associated with providing online services or content "Privacy concerns relating to our technology could damage our reputation and deter current and potential users from using our products and services"
"With our acquisition of Motorola, we face a number of manufacturing and supply chain risks that, if not properly managed, could adversely impact our financial results and prospects"
"If our security measures are breached, or if our services are subject to attacks that degrade or deny the ability of users to access our products and services, our products and services may be perceived as not being secure, users and customers may curtail or stop using our products and services, and we may incur significant legal and financial exposure"
"Web spam and content farms could decrease our search quality, which could damage our reputation and deter our current and potential users from using our products and services"
"Interruption or failure of our information technology and communications systems could hurt our ability to effectively provide our products and services, which could damage our reputation and harm our operating results."
"Our international operations expose us to additional risks that could harm our business, operating results, and financial condition."
"Our operating results may fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations."
"If we were to lose the services of Larry, Sergey, Eric, or other key personnel, we may not be able to execute our business strategy." Comment : Trust me it would have no impact on the Business
"We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel, hire qualified personnel, or maintain our corporate culture, we may not be able to grow effectively"
"Our business depends on continued and unimpeded access to the internet by us and our users. Internet access providers may be able to block, degrade, or charge for access to certain of our products and services, which could lead to additional expenses and the loss of users and advertisers."
New technologies could block our ads, which would harm our business Comment : I believe a technology can be developed to ad block any google search page, I believe why none of them are investing in such technology,i.... just kidding Capitalism rules nothing for free except for Wikipedia - screw you Jimmy Wales
We are exposed to fluctuations in the market values of our investment portfolio. We may have exposure to greater than anticipated tax liabilities
"Our revenue growth rate could decline over time, and we anticipate downward pressure on our operating margin in the future."

This is the most honest risk analysis by a major tech company confirming the fact that Google needs to diversify into new ventures to attract more revenues and keep their shareholders happy. Facebook risk factors was also an interesting read.