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GOOG » Topics » Acquisitions and investments could result in operating difficulties, dilution, and other harmful consequences.

This excerpt taken from the GOOG 10-K filed Feb 12, 2010.

Acquisitions and investments could result in operating difficulties, dilution, and other harmful consequences.

We have acquired a number of businesses in the past, including our acquisitions of DoubleClick and Postini. We expect to continue to evaluate and enter into discussions regarding a wide array of potential strategic transactions. In particular, we expect to increase the number of acquisitions we make in 2010 compared to 2009. These transactions could be material to our financial condition and results of operations. The process of integrating an acquired company, business, or technology has created, and will continue to create, unforeseen operating difficulties and expenditures. The areas where we face risks include:

 

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Implementation or remediation of controls, procedures, and policies at the acquired company.

 

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Diversion of management time and focus from operating our business to acquisition integration challenges.

 

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Coordination of product, engineering, and sales and marketing functions.

 

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Transition of operations, users, and customers onto our existing platforms.

 

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Cultural challenges associated with integrating employees from the acquired company into our organization.

 

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Retention of employees from the businesses we acquire.

 

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Integration of the acquired company’s accounting, management information, human resource, and other administrative systems.

 

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Liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities.

 

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Litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders, or other third parties.

 

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In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries.

 

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Failure to successfully further develop the acquired technology.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of such acquisitions or investments, incur unanticipated liabilities, and harm our business generally.

Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, or amortization expenses, or write-offs of goodwill, any of which could harm our financial condition. Also, the anticipated benefit of many of our acquisitions may not materialize. For example, we have yet to realize significant revenue benefits from our acquisition of YouTube.

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