| TIBCO SOFTWARE INC ITEM 1A RISK FACTORS The following risk factors could materially and adversely affect our future operating results and could cause actual events to differ materially from those predicted in the forward-looking statements we make about our business |
| Our future revenue is unpredictable and we expect our quarterly operating results to fluctuate, which may cause our stock price to decline |
| Period-to-period comparisons of our operating results may not be a good indication of our future performance |
| Moreover, our operating results in some quarters have not in the past, and may not in the future, meet the expectations of stock market analysts and investors |
| As a result of the evolving nature of the markets in which we compete and the size of our customer agreements, we have difficulty accurately forecasting our revenue in any given period |
| In addition to the factors discussed elsewhere in this section, a number of factors may cause our revenue to fall short of our expectations, or those of stock market analysts and investors, or cause fluctuations in our operating results, including: • the announcement or introduction of new or enhanced products or services by our competitors; • the relatively long sales cycles for many of our products; • the tendency of some of our customers to wait until the end of a fiscal quarter or our fiscal year in the hope of obtaining more favorable terms; 8 ______________________________________________________________________ [30]Table of Contents • the timing of our new products or product enhancements or any delays in such introductions; • the delay or deferral of customer implementations of our products; • changes in customer budgets and decision making processes that could affect both the timing and size of any transaction; • our dependence on large deals, which if not closed, can greatly impact revenues for a particular quarter; • the impact of our provision of services on our recognition of license revenue; • any difficulty we encounter in integrating acquired businesses, products or technologies; • the amount and timing of operating costs and capital expenditures relating to the expansion of our operations; • the impact of employee stock-based compensation expenses on our earnings per share; and • changes in local, national and international regulatory requirements |
| In addition, while we may in future years record positive net income and/or increases in net income over prior periods, we may not show period-over-period earnings per share growth or earnings per share growth that meets the expectations of stock market analysts or investors, as a result of the number of our shares outstanding during such periods |
| In such case, our stock price may decline |
| Our stock price may be volatile, which could cause investors to lose all or part of their investments in our stock or negatively impact the effectiveness of our equity incentive plans |
| The stock market in general and the stock prices of technology companies in particular, have experienced volatility which has often been unrelated to the operating performance of any particular company or companies |
| During fiscal year 2005, for example, our stock price fluctuated between a high of dlra13dtta50 and a low of dlra5dtta60 |
| If market or industry-based fluctuations continue, our stock price could decline in the future regardless of our actual operating performance and investors could lose all or part of their investments |
| Increases in services revenues as a percentage of total revenues may decrease overall margins |
| We have in the past realized and may continue in the future realize a higher percentage of revenues from services and maintenance |
| For example, for the fiscal year ended November 30, 2005 a substantial increase in our service and maintenance revenue and a decrease in our license revenue meant approximately 54prca of our total revenue for the year was derived from service and maintenance revenue |
| We realize lower profit margins on our services and maintenance revenues than on our software license revenues |
| In addition, we may contract with certain third parties to supplement the services we provide to customers, which generally yields lower margins than our internal services business |
| We must overcome significant competition in order to succeed |
| The market for our products and services is extremely competitive and subject to rapid change |
| We compete with various providers of enterprise application integration solutions, including webMethods |
| We also compete with various providers of web services such as Microsoft, BEA, SAP and IBM We believe that of these companies, IBM has the potential to offer the most complete competitive set of products for enterprise application integration |
| As a result of our acquisition of Staffware, we now also compete with various providers of BPM solutions |
| In addition, some of our competitors are expanding their competitive product offerings and market position through acquisitions |
| For example, Sun Microsystems acquired SeeBeyond in August 2005, potentially making Sun Microsystems a direct competitor of ours as well |
| We expect additional competition from 9 ______________________________________________________________________ [31]Table of Contents other established and emerging companies |
| We also face competition for certain aspects of our product and service offerings from major systems integrators |
| Further, we may face increasing competition from open source software initiatives, in which competitors provide software and intellectual property without charging license fees |
| If customers choose such open source products over our proprietary software, our revenues and earnings could be adversely affected |
| Many of our current and potential competitors have longer operating histories; significantly greater financial, technical, product development and marketing resources; greater name recognition and larger customer bases than we do |
| Our present or future competitors may be able to develop products comparable or superior to those we offer; adapt more quickly than we do to new technologies, evolving industry trends or customer requirements; or devote greater resources to the development, promotion and sale of their products than we do |
| Accordingly, we may not be able to compete effectively in our markets or competition may intensify and harm our business and operating results |
| If we are not successful in developing enhancements to existing products and new products in a timely manner, achieving customer acceptance or generating higher average selling prices, our gross margins may decline, and our business and operating results may suffer |
| Future changes in financial accounting standards may adversely affect our reported results of operations |
| A change in accounting standards can have a significant effect on our reported results |
| New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future |
| These new accounting pronouncements may adversely affect our reported financial results |
| For example, currently we calculate employee stock-based compensation expenses using the intrinsic value method, and recorded less than dlra0dtta1 million in employee compensation expense in each of fiscal years 2005 and 2004 |
| We provided disclosure on pro forma net income and net income per share as if we had applied the fair value method of accounting only in the notes to our financial statements |
| Under Statement of Financial Accounting Standards Nodtta 123(R), “Share Based Payment” (“SFAS 123(R)”), we will be required, starting from our first quarter of fiscal year 2006, to calculate compensation expense related to all share-based awards and recognize the expense in our financial statements |
| We expect such compensation expenses to be significant, and will cause our net income and net income per share to be significantly reduced |
| Our strategy contemplates possible future acquisitions which may result in us incurring unanticipated expenses or additional debt, difficulty in integrating our operations, dilution to our stockholders and may harm our operating results |
| Our success depends in part on our ability to continually enhance and broaden our product offerings in response to changing technologies, customer demands and competitive pressures |
| We have in the past and may in the future, acquire complementary businesses, products or technologies |
| In this regard, we have made strategic acquisitions, including the acquisition of certain assets of Velosel Corporation and ObjectStar International in 2005, and the acquisition of Staffware PLC and General Interface Corporation in 2004 |
| We do not know if we will be able to complete any subsequent acquisition or that we will be able to successfully integrate any acquired business, operate it profitably, or retain its key employees |
| Integrating any newly acquired business, product or technology could be expensive and time-consuming, could disrupt our ongoing business and could distract our management |
| In particular, integrating sales forces and strategies for marketing and sales has in the past required and will likely require in the future, much time, effort and expense, especially from our management team |
| Therefore, we might not be able, either immediately post-acquisition or ever, to replicate the pre-acquisition revenues achieved by companies that we acquire or achieve the benefits of the acquisition we anticipated in valuing the businesses, products or technologies we acquire |
| Furthermore, the costs of integrating acquired companies in international transactions can be particularly high, due to local laws and regulations |
| If we are unable to integrate any newly acquired entity, products or technology effectively, our business, financial condition and operating results would suffer |
| In addition, any amortization or impairment of acquired intangible assets, stock-based compensation or other charges resulting from the costs of acquisitions could harm our operating results |
| 10 ______________________________________________________________________ [32]Table of Contents In addition, we may face competition for acquisition targets from larger and more established companies with greater financial resources |
| Also, in order to finance any acquisition, we might need to raise additional funds through public or private financings or use our cash reserves |
| In that event, we could be forced to obtain equity or debt financing on terms that are not favorable to us and, in the case of equity financing, that may result in dilution to our stockholders |
| Use of our cash reserves for acquisitions could limit our financial flexibility in the future |
| Moreover, the terms of existing loan agreements may prohibit certain acquisitions or may place limits on our ability to incur additional indebtedness or issue additional equity securities to finance acquisitions |
| If we are not able to acquire strategically attractive businesses, products or technologies we may not be able to remain competitive in our industry |
| The past slowdown in the market for infrastructure software and its protracted recovery have caused our revenue to decline in the past and could cause our revenue or results of operations to fall below expectations in the future |
| The market for infrastructure software is relatively new and evolving |
| We earn a substantial portion of our revenue from licenses of our infrastructure software, including application integration software, and sales of related services |
| We expect to earn substantially all of our revenue in the foreseeable future from sales of these products and services |
| Our future financial performance will depend on continued growth in the number of organizations demanding software and services for application integration and information delivery and companies seeking outside vendors to develop, manage and maintain this software for their critical applications |
| Lower spending by corporate and governmental customers around the world, which has had a disproportionate impact on information technology spending, has led to a reduction in sales in the past and may continue to do so in the future |
| Many of our potential customers have made significant investments in internally developed systems and would incur significant costs in switching to third-party products, which may substantially inhibit the growth of the market for infrastructure software |
| If the market fails to grow, or grows more slowly than we expect, our sales will be adversely affected |
| Also, even as corporate and governmental spending increases and companies make greater investments in information technology and infrastructure software, our revenue may not grow at the same pace |
| Our business is subject to seasonal variations which make quarter-to-quarter comparisons difficult |
| Our business is subject to variations throughout the year due to seasonal factors in the US and worldwide |
| These factors include fewer selling days in Europe during the summer vacation season which has a disproportionate effect on sales in Europe, the impact of the holidays and a slow down in capital expenditures by our customers at calendar year-end (during our first fiscal quarter) |
| These factors typically result in lower sales activity in our first and third fiscal quarters compared to the rest of the year and they make quarter-to-quarter comparisons of our operating results less meaningful |
| Any failure by us to meet the requirements of current or newly-targeted customers may have a detrimental impact on our business or operating results |
| If we fail to meet the expectations or product and service requirements of our current customers, our reputation and business may be harmed |
| In addition, we may wish to expand our customer base into markets in which we have limited experience |
| In some cases, customers in different markets, such as financial services or government, have specific regulatory or other requirements which we must meet |
| For example, in order to maintain contracts with the US Government, we must comply with specific rules and regulations relating to and that govern such contracts |
| While we have historically met the requirements of our customers, if we fail to meet such requirements in the future, we could be subject to civil or criminal liability or a reduction of revenue which could harm our business, operating results and financial condition |
| 11 ______________________________________________________________________ [33]Table of Contents Any losses we incur as a result of our exposure to the credit risk of our customers could harm our results of operations |
| We monitor individual customer payment capability in granting such open credit arrangements, seek to limit credit to amounts we believe the customers can pay, and maintain reserves we believe are adequate to cover exposure for doubtful accounts |
| As we have grown our revenue and customer base, our exposure to credit risk has increased |
| Although we have not had material losses to date as a result of customer defaults, future defaults, if incurred, could harm our business and have an adverse effect on our business, operating results and financial condition |
| We are required to undertake an annual evaluation of our internal control over financial reporting (“ICFR”) that may identify internal control weaknesses requiring remediation, which could harm our reputation and confidence in our financial reporting |
| Sarbanes-Oxley imposes duties on us, our executives, and directors |
| We completed our fiscal year 2005 evaluation of the design, remediation and testing of effectiveness of our internal control over financial reporting required to comply with the management certification and attestation by our independent registered public accounting firm as required by Section 404 of Sarbanes-Oxley (“Section 404”) |
| While our assessment, testing and evaluation of the design and operating effectiveness of our internal control over financial reporting resulted in our conclusion that as of November 30, 2005, our ICFR were effective, we cannot predict the outcome of our testing in future periods |
| If we conclude in future periods that our ICFR is not effective, we may be required to change our ICFR to remediate deficiencies, investors may lose confidence in the reliability of our financial statements, and we may be subject to investigation and/or sanctions by regulatory authorities |
| Also, if we identify areas of our ICFR that require improvement, we could incur additional expenses to implement enhanced processes and controls to address such issues |
| Any such events could adversely affect our financial results and/or may result in a negative reaction in the stock market |
| Regulatory requirements have caused us to incur increased costs and operating expenses, may limit our ability to obtain director and officer liability insurance and may make it more difficult for us to attract and retain qualified officers and directors |
| Sarbanes-Oxley and rules enacted by the SEC and Nasdaq have caused us, and we expect will continue to cause us, to incur significant costs as a result of these regulatory requirements |
| In this regard, achieving and maintaining compliance with Sarbanes-Oxley and other rules and regulations, have caused us to hire additional personnel and use additional outside legal, accounting and advisory services and may require us to do so in the future |
| Failure to satisfy the rules could make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage |
| The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, or as executive officers |
| We may incur significant expenses in both hiring new employees and reducing or re-aligning our headcount in response to changing market conditions |
| We have increased the scope of our operations both domestically and internationally |
| Our success is dependent on successfully managing our workforce |
| As we grow, we must invest significantly in building our sales, marketing and engineering groups |
| Competition for these people in the software industries is intense, and we may not be able to successfully recruit, train or retain qualified personnel |
| In addition, we must successfully integrate new employees into our operations and generate sufficient revenues to justify the costs associated with these employees |
| If we fail to successfully integrate employees or to generate the revenue necessary to offset employee-related expenses, we may be forced to reduce our headcount, which would force us to incur significant expenses and would harm our business and operating results |
| For example, in the year ended November 30, 2005, we recorded a dlra3dtta9 million restructuring charge for a workforce reduction to re-align our resources and cost structure |
| Failure to manage our operations effectively could interfere with the growth of our business as a whole |
| 12 ______________________________________________________________________ [34]Table of Contents If we do not retain our key management personnel and attract, hire and retain other highly skilled employees, we may not be able to execute our business strategy effectively |
| If we fail to retain and recruit key management and other skilled employees, our business and our ability to obtain new customers, develop new products and provide acceptable levels of customer service could suffer |
| The success of our business is heavily dependent on the leadership of our key management personnel, including Vivek Ranadive, our President and Chief Executive Officer |
| The loss of one or more key employees could adversely affect our continued operations |
| We have experienced changes in our management organization over the past several years and may experience additional management changes in the future |
| Uncertainty created by turnover of key employees could also result in reduced confidence in our financial performance which could cause fluctuations in our stock price and result in further turnover of our employees |
| The value of our equity incentive programs may diminish as a retention tool as a result of the changes in the financial accounting standards and our stock price volatility |
| We have historically used equity incentive programs, such as employee stock options and stock purchase plans, as a part of overall employee compensation arrangements |
| As a result of changes in the financial accounting standards, we have changed our stock purchase plan and may reduce the size and number of stock option grants we give to our employees, both of which may decrease the effectiveness of our plans as employee retention tools |
| In addition, the volatility of our stock price may negatively impact the value of such equity incentives, thereby diminishing the value of such incentive programs to employees and decreasing the effectiveness of such programs as retention tools |
| The inability to upsell to our current customers or the loss of any significant customer could harm our business and cause our stock price to decline |
| We do not have long-term sales contracts with any of our customers |
| Any inability on our part to upsell to and generate revenues from our existing customers could adversely affect our business and operating results |
| Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products |
| We cannot be certain that our products do not infringe issued patents or other intellectual property rights of others |
| In addition, our use of Open Source components in our products may make us increasingly vulnerable to claims that our products infringe third-party intellectual property rights, in particular because many of the Open Source components we may incorporate with our products are developed by numerous independent parties over whom we exercise no supervision or control |
| Further, because patent applications in the United States and many other countries are not publicly disclosed until a patent is issued, applications covering technology used in our software products may have been filed without our knowledge |
| While no claims have been filed against us to date, we may be subject to legal proceedings and claims from time to time, including claims of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us or our licensees in connection with their use of our products |
| Although no claims have been made in the past, our software license agreements typically provide for indemnification of our customers for intellectual property infringement claims |
| Intellectual property litigation is expensive and time-consuming and could divert our management’s attention away from running our business and seriously harm our business |
| If we were to discover that our products violated the intellectual property rights of others, we would have to obtain licenses from these parties in order to continue marketing our products without substantial reengineering |
| We might not be able to obtain the necessary licenses on acceptable terms or at all, and if we could not obtain such licenses, we might not be able to reengineer our products successfully or in a timely fashion |
| If we fail to address any infringement issues successfully, we would be forced to incur significant costs, including damages and potentially satisfying indemnification obligations that we have with our customers, and we could be prevented from selling certain of our products |
| 13 ______________________________________________________________________ [35]Table of Contents Our intellectual property or proprietary rights could be misappropriated, which could force us to become involved in expensive and time-consuming litigation |
| We regard our copyrights, service marks, trademarks, trade secrets, patents (licensed or others) and similar intellectual property as critical to our success |
| Any misappropriation of our proprietary information by third parties could harm our business, financial condition and operating results |
| In addition, the laws of some countries do not provide the same level of protection of our proprietary information as do the laws of the United States |
| If our proprietary information or material were misappropriated, we might have to engage in litigation to protect it |
| We might not succeed in protecting our proprietary information if we initiate intellectual property litigation, and, in any event, such litigation would be expensive and time-consuming, could divert our management’s attention away from running our business and could seriously harm our business |
| Market acceptance of new platforms and web services standards may require us to undergo the expense of developing and maintaining compatible product lines |
| Our software products can be licensed for use with a variety of platforms |
| There may be future or existing platforms that achieve popularity in the marketplace which may not be architecturally compatible with our software products |
| In addition, the effort and expense of developing, testing and maintaining software products will increase as more platforms achieve market acceptance within our target markets |
| Moreover, future or existing user interfaces that achieve popularity within the enterprise application integration marketplace may not be compatible with our current software products |
| If we are unable to achieve market acceptance of our software products or adapt to new platforms, our sales and revenues will be adversely affected |
| Developing and maintaining different software products could place a significant strain on our resources and software product release schedules, which could harm our revenue and financial condition |
| If we are not able to develop software for accepted platforms or fail to adopt webservices standards, our license and service revenues and our gross margins could be adversely affected |
| In addition, if the platforms we have developed software for are not accepted, our license and service revenues and our gross margins could be adversely affected |
| We may experience foreign currency gains and losses |
| Our operating results are subject to fluctuations in foreign currency exchange rates |
| We attempt to mitigate a portion of these risks through foreign currency hedging, based on our judgment of the appropriate trade-offs among risk, opportunity and expense |
| We have established a hedging program designed to partially hedge our exposure to foreign currency exchange rate fluctuations, primarily the Euro and the British Pound |
| We regularly review our hedging program and will make adjustments based on our judgment |
| Although our hedging activities are designed to offset a portion of the financial impact resulting from the movement in foreign currency exchange rates, if we are unable to offset the effects of currency fluctuation, our operating results could be adversely affected |
| Our agreement with Reuters places certain limitations on our ability to conduct our business |
| Pursuant to the terms of our agreement with Reuters, we are permitted to market and sell our products, other than risk management and market data distribution products, directly and through third party resellers (other than a few specified resellers) to customers in the financial services market |
| The limitations on our ability to sell risk management and market data distribution products and on reselling through the specified resellers will continue through May 2008 |
| While we currently do not offer any risk management and market data distribution solutions as part of our product offerings, if we were to develop any such products, we would have to rely on Reuters to sell those products in the financial services market until these restrictions end |
| Reuters is not required to help us sell any of these products in those markets and Reuters may choose not to sell our products over our competitors’ products |
| In addition, we license from Reuters the intellectual property that was incorporated into early versions of some of our software products |
| We do not own this licensed technology |
| Because Reuters has access to 14 ______________________________________________________________________ [36]Table of Contents intellectual property used in our products, it could use this intellectual property to compete with us |
| Reuters is not restricted from using the licensed technology it has licensed to us to produce products that compete with our products, and it can grant limited licenses to the licensed technology to others who may compete with us |
| In addition, we must license to Reuters all of the products we own, and the source code for one of our messaging products, through December 2012 |
| This may place Reuters in a position to more easily develop products that compete with ours |
| Natural or other disasters could disrupt our business and result in loss of revenue or in higher expenses |
| Natural disasters, terrorist activities and other business disruptions could seriously harm our revenue and financial condition and increase our costs and expenses |
| Our corporate headquarters and many of our operations are located in California, a seismically active region |
| In addition, many of our current and potential customers are concentrated in a few geographic areas |
| A natural disaster in one of these regions could have a material adverse impact on our US and foreign operations, operating results and financial condition |
| Further, although we have not experienced a disruption to date, any unanticipated business disruption caused by Internet security threats, damage to global communication networks or otherwise could have a material adverse impact on our operating results |
| The outcome of litigation pending against us could require us to expend significant resources and could harm our business and financial resources |
| In May 2005, three purported shareholder class action complaints were filed against us and several of our officers in the US District Court for the Northern District of California |
| The plaintiffs in such actions are seeking to represent a class of purchasers of TIBCO’s common stock from September 21, 2004 through March 1, 2005 |
| The complaints generally allege that we made false or misleading statements concerning our operating results, our business and internal controls and the integration of Staffware |
| The complaints seek unspecified monetary damages |
| We intend to defend ourselves vigorously; however, we expect to incur significant costs in mounting such defense |
| In September 2005, a shareholder derivative complaint was filed against certain of our officers and directors in the Superior Court of the State of California, Santa Clara County |
| The complaint is based on substantially similar facts and circumstances as the class actions and generally alleged that the named directors and officers breached their fiduciary duties to TIBCO The complaint seeks unspecified monetary damages |
| Given the nature of derivative litigation, any recovery in a derivative suit would be to the benefit of TIBCO In addition, certain of our directors and officers and certain investment bank underwriters have been named in a putative class action for violation of the federal securities laws in the US District Court for the Southern District of New York, captioned “In re TIBCO Software Inc |
| ” This is one of a number of cases challenging underwriting practices in the initial public offerings of more than 300 companies, which have been coordinated for pretrial proceedings as “In re Initial Public Offering Securities Litigation |
| ” Plaintiffs generally allege that the underwriters engaged in undisclosed and improper underwriting activities, namely the receipt of excessive brokerage commissions and customer agreements regarding post-offering purchases of stock in exchange for allocations of IPO shares |
| Plaintiffs also allege that various investment bank securities analysts issued false and misleading analyst reports |
| The complaint against us claims that the purported improper underwriting activities were not disclosed in the registration statements for our IPO and secondary public offering and seeks unspecified damages on behalf of a purported class of persons who purchased our securities or sold put options during the time period from July 13, 1999 to December 6, 2000 |
| A lawsuit with similar allegations of undisclosed improper underwriting practices, and part of the same coordinated proceedings, is pending against Talarian, which we acquired in 2002 |
| Initial Public Offering Securities Litigation |
| ” The complaint against Talarian, certain of its underwriters, and certain of its former directors and officers claims that the purported improper underwriting activities were not disclosed in the registration statement for Talarian’s IPO and seeks unspecified damages on behalf of a purported class of persons who purchased Talarian securities during the time period from July 20, 2000 to December 6, 2000 |
| 15 ______________________________________________________________________ [37]Table of Contents A proposal to settle the claims against all of the issuers and individual defendants in the coordinated litigation was accepted by us and given preliminary Court approval |
| The completion of the settlement is subject to a number of conditions, including final approval by the Court |
| Under the settlement, the plaintiffs will dismiss and release all claims against participating defendants in exchange for a contingent payment guaranty by the insurance companies collectively responsible for insuring the issuers in the action, and the assignment or surrender to the plaintiffs of certain claims the issuer defendants may have against the underwriters |
| Under the guaranty, the insurers will be required to pay an amount equal to dlra1dtta0 billion less any amounts ultimately collected by the plaintiffs from the underwriter defendants in all the cases |
| Unlike most of the defendant issuers’ insurance policies, including ours, Talarian’s policy contains a specific self-insured retention in the amount of dlra0dtta5 million for IPO “laddering” claims, including those alleged in this matter |
| Thus, under the proposed settlement, if any payment is required under the insurers’ guaranty, our subsidiary, Talarian, would be responsible for paying its pro rata share of the shortfall, up to dlra0dtta5 million of the self-insured retention remaining under its policy |
| The uncertainty associated with substantial unresolved lawsuits could harm our business, financial condition and reputation |
| The defense of the lawsuits could result in the diversion of our management’s time and attention away from business operations, which could harm our business |
| Negative developments with respect to the lawsuits could cause our stock price to decline |
| In addition, although we are unable to determine the amount, if any, that we may be required to pay in connection with the resolution of the lawsuits by settlement or otherwise, any such payment could seriously harm our financial condition and liquidity |
| The use of Open Source Software in our products may expose us to additional risks |
| “Open Source Software” is software that is covered by a license agreement which permits the user to liberally copy, modify and distribute the software for free |
| Certain Open Source Software is licensed pursuant to license agreements that require a user who intends to distribute the Open Source Software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software |
| This effectively renders what was previously proprietary software Open Source Software |
| As competition in our markets increases, we must reduce our product development costs |
| Many features we may wish to add to our products in the future may be available as Open Source Software and our development team may wish to make use of this software to reduce development costs and speed up the development process |
| While we monitor the use of all Open Source Software and try to ensure that no Open Source Software is used in such a way as to require us to disclose the source code to the related product, such use could inadvertently occur |
| Additionally, if a third party has incorporated certain types of Open Source Software into its software, has not disclosed the presence of such Open Source Software and we embed that third party software into one or more of our products, we could, under certain circumstances, be required to disclose the source code to our product |
| Some provisions in our certificate of incorporation and bylaws, as well as a stockholder rights plan, may have anti-takeover effects |
| We have a stockholder rights plan providing for one right for each outstanding share of our common stock |
| Each right, when exercisable, entitles the registered holder to purchase certain securities at a specified purchase price |
| The rights plan may have the anti-takeover effect of causing substantial dilution to a person or group that attempts to acquire TIBCO on terms not approved by our Board of Directors |
| The existence of the rights plan could limit the price that certain investors might be willing to pay in the future for shares of our common stock and could discourage, delay or prevent a merger or acquisition that stockholders may consider favorable |
| In addition, provisions of our current certificate of incorporation and bylaws, as well as Delaware corporate law, could make it more difficult for a third party to acquire us without the support of our Board of Directors, even if doing so would be beneficial to our stockholders |