Taleo (TLEO)

or have a higher than expected cost structure to host and maintain, our business and operating results will be adversely affected. Our efforts to expand our solutions beyond our current offerings or beyond the talent management market may divert management resources from existing operations and require us to commit significant financial resources to an unproven business, which may harm our existing business.

 

We expect to incur additional expense to develop software products and to integrate acquired software products into existing platforms to maintain our competitive position. In addition, we intend to invest in software development locations other than the locations where we currently develop our software. Such locations may include locations in Eastern Europe, Russia, Asia and other locations outside of North America, and we may engage independent contractors for all or portions of this work. These efforts may not result in commercially viable solutions, may be more expensive or less productive than we anticipate, or may be difficult to manage and result in distraction to our management team. If we do not manage these remote development centers effectively or receive significant revenue from our product development investments, our business will be adversely affected. Additionally, we intend to maintain a single version of each release of our software applications that is configurable to meet the needs of our customers. Customers may require customized solutions or features and functions that we do not yet offer and do not intend to offer in future releases, which may disrupt out ability to maintain a single version of our software releases or cause our customers to choose a competing solution.

 

Acquisitions and investments present many risks, and we may not realize the anticipated financial and strategic goals for any such transactions, which would harm our business, operating results and overall financial condition. In addition, we have limited experience in acquiring and integrating other companies.

 

We have made, and may continue to make, acquisitions or investments in companies, products, services, and technologies to expand our product offerings, customer base and business. We have limited experience in executing acquisitions. Acquisitions and investments involve a number of risks, including the following:

 

 

The consideration paid in connection with an investment or acquisition also affects our financial results. If we should proceed with one or more significant acquisitions in which the consideration includes cash, we could be required to use a substantial portion of our available cash to consummate any such acquisition. To the extent that we issue shares of stock or other rights to purchase stock, existing stockholders may be diluted and earnings per share may decrease. In addition, acquisitions may result in the incurrence of debt, material one-time write-offs, or purchase accounting adjustments and restructuring charges. They may also result in recording goodwill and other intangible assets in our financial statements which may be subject to future impairment charges or ongoing amortization costs, thereby reducing future earnings. In addition, from time to time, we may enter into negotiations for acquisitions or investments that are not ultimately consummated. Such negotiations could result in significant diversion of management time, as well as incurring expenses that may impact operating results.

We are discontinuing the time and expense processing services of our Taleo Contingent solution and intend to provide time and expense processing services to our current customers only through the expiration of their current agreements. We may have difficulty replacing the revenue from these customers.

 

During 2007, we continued to generate revenue from our Taleo Contingent solution based on a fixed percentage of the dollar amount invoiced for temporary labor charges processed through our time and expense functionality. Effective March 2007, we ceased entering into agreements to provide time and expense processing services for temporary workers and, accordingly, our revenue from such processing services will end. We are servicing our current customers to which we provide such time and expense processing services through the expiration of their current agreements with us. Fees for time and expense processing through our Taleo Contingent product declined throughout 2007; however, on an annualized basis such fees were still significant in 2007. We expect revenue from time and expense processing for these customers to continue to decline and ultimately end in 2008.

 

We may find it difficult to replace the revenue we currently receive from the processing of temporary worker time and expense transactions and our results may be negatively impacted.

 

 

To keep pace with technological developments, satisfy
increasingly sophisticated customer requirements, and achieve
market acceptance, we must enhance and improve existing products
and continue to introduce new products and services. For
instance, in February 2008 our performance management software
product became generally available in the market. Any new
products we develop or acquire may not be introduced in a timely
manner and may not achieve the broad market acceptance necessary
to generate significant revenue. If we are unable to develop or
acquire new products that appeal to our target customer base or
enhance our existing products or if we fail to price our
products to meet market demand or if the products we develop or
acquire do not meet performance expectations

or have a higher than expected cost structure to host and
maintain, our business and operating results will be adversely
affected. Our efforts to expand our solutions beyond our current
offerings or beyond the talent management market may divert
management resources from existing operations and require us to
commit significant financial resources to an unproven business,
which may harm our existing business.

 

We expect to incur additional expense to develop software
products and to integrate acquired software products into
existing platforms to maintain our competitive position. In
addition, we intend to invest in software development locations
other than the locations where we currently develop our
software. Such locations may include locations in Eastern
Europe, Russia, Asia and other locations outside of North
America, and we may engage independent contractors for all or
portions of this work. These efforts may not result in
commercially viable solutions, may be more expensive or less
productive than we anticipate, or may be difficult to manage and
result in distraction to our management team. If we do not
manage these remote development centers effectively or receive
significant revenue from our product development investments,
our business will be adversely affected. Additionally, we intend
to maintain a single version of each release of our software
applications that is configurable to meet the needs of our
customers. Customers may require customized solutions or
features and functions that we do not yet offer and do not
intend to offer in future releases, which may disrupt out
ability to maintain a single version of our software releases or
cause our customers to choose a competing solution.

 

Acquisitions
and investments present many risks, and we may not realize the
anticipated financial and strategic goals for any such
transactions, which would harm our business, operating results
and overall financial condition. In addition, we have limited
experience in acquiring and integrating other
companies.

 

We have made, and may continue to make, acquisitions or
investments in companies, products, services, and technologies
to expand our product offerings, customer base and business. We
have limited experience in executing acquisitions. Acquisitions
and investments involve a number of risks, including the
following:

 

 

The consideration paid in connection with an investment or
acquisition also affects our financial results. If we should
proceed with one or more significant acquisitions in which the
consideration includes cash, we could be required to use a
substantial portion of our available cash to consummate any such
acquisition. To the extent that we issue shares of stock or
other rights to purchase stock, existing stockholders may be
diluted and earnings per share may decrease. In addition,
acquisitions may result in the incurrence of debt, material
one-time write-offs, or purchase accounting adjustments and
restructuring charges. They may also result in recording
goodwill and other intangible assets in our financial statements
which may be subject to future impairment charges or ongoing
amortization costs, thereby reducing future earnings. In
addition, from time to time, we may enter into negotiations for
acquisitions or investments that are not ultimately consummated.
Such negotiations could result in significant diversion of
management time, as well as incurring expenses that may impact
operating results.

We are
discontinuing the time and expense processing services of our
Taleo Contingent solution and intend to provide time and expense
processing services to our current customers only through the
expiration of their current agreements. We may have difficulty
replacing the revenue from these customers.

 

During 2007, we continued to generate revenue from our Taleo
Contingent solution based on a fixed percentage of the dollar
amount invoiced for temporary labor charges processed through
our time and expense functionality. Effective March 2007, we
ceased entering into agreements to provide time and expense
processing services for temporary workers and, accordingly, our
revenue from such processing services will end. We are servicing
our current customers to which we provide such time and expense
processing services through the expiration of their current
agreements with us. Fees for time and expense processing through
our Taleo Contingent product declined throughout 2007; however,
on an annualized basis such fees were still significant in 2007.
We expect revenue from time and expense processing for these
customers to continue to decline and ultimately end in 2008.

 

We may find it difficult to replace the revenue we currently
receive from the processing of temporary worker time and expense
transactions and our results may be negatively impacted.

 

 

Acquisitions and investments present many risks, and we may not realize the anticipated financial and strategic goals for any such transactions, which would harm our business, operating results and overall financial condition. In addition, we have limited experience in acquiring and integrating other companies.

 

We have made, and may continue to make, acquisitions or investments in companies, products, services, and technologies to expand our product offerings, customer base and business. We have limited experience in executing acquisitions. In October 2003, we acquired White Amber, which we introduced our Taleo Contingent, and in March 2005, we acquired Recruitforce.com, which we introduced as Taleo Business Edition. In March 2007, we acquired certain assets of Job Flash, Inc., with which we intend to offer additional products to our customers. Such acquisitions and investments involve a number of risks, including the following:

 

 

For example, with respect to our acquisition of White Amber, we expended significant management time in attending to integration activities relating to employee relations and benefits matters, integration of product pricing, and the consolidation of other infrastructure to common systems. From time to time, we may enter into negotiations for acquisitions or investments that are not ultimately consummated. Such negotiations could result in significant diversion of management time, as well as out-of-pocket costs.

 

The consideration paid in connection with an investment or acquisition also affects our financial results. If we should proceed with one or more significant acquisitions in which the consideration includes cash, we could be required to use a substantial portion of our available cash to consummate any such acquisition. To the extent that we issue shares of stock or other rights to purchase stock, existing stockholders may be diluted and earnings per share may decrease. In addition, acquisitions may result in the incurrence of debt, material one-time write-offs, or purchase accounting adjustments and restructuring charges. They may also result in recording goodwill and other intangible assets in our financial statements which may be subject to future impairment charges or ongoing amortization costs, thereby reducing future earnings.