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EXHIBIT 99
RISK FACTORS
Investing in our common stock involves a high degree of risk. You should
carefully consider the risks and uncertainties described below before purchasing
our common stock. If any of the following risks actually occur, our business,
financial condition or results of operations could be harmed. In that case, the
trading price of our common stock could decline, and you could lose all or part
of your investment.
IF WE DO NOT ATTRACT AND RETAIN QUALIFIED PROFESSIONAL STAFF, WE WILL NOT BE
ABLE TO MAINTAIN OUR POSITION IN THE MARKET OR GROW OUR BUSINESS
Our future success will depend in large measure upon the continued
contributions of our senior management team, research analysts and experienced
sales and marketing personnel. Thus, our future operating results will be
largely dependent upon our ability to retain the services of these individuals
and to attract additional qualified people from a limited pool of qualified
candidates. We experience intense competition in hiring and retaining
professionals from developers of Internet and emerging technology products,
other research firms, management consulting firms, print and electronic
publishing companies and financial services companies. Many of these firms have
substantially greater ability, either through cash or equity, to attract and
compensate qualified people. In addition, the Internet has created many
opportunities for people with the skills we seek to form their own companies or
join start-up companies, and these opportunities frequently offer the potential
for significant future financial profit through equity incentives that we cannot
match. If we lose professionals or are unable to attract new talent to
Forrester, we will not be able to maintain our position in the market or grow
our business.
IF WE DO NOT MANAGE OUR GROWTH EFFECTIVELY, IT COULD ADVERSELY AFFECT OUR
ABILITY TO GROW REVENUE AND COULD INCREASE OUR OPERATING EXPENSES
Our growth has placed significant demands on our management and other
resources. Our revenues increased approximately 42% to $87.3 million in the year
ended December 31, 1999 from $61.6 million in the year ended December 31, 1998.
Our ability to effectively manage growth will require us to continue to develop
and improve our operational, financial, electronic research collection and
distribution, technology and other internal systems. We must also continue to
expand our business development capabilities and continue to train, motivate and
manage our employees. If we are unable to effectively manage our growth, it
would have an adverse effect on the quality of our products and services, our
ability to retain key personnel and to grow revenue and could increase our
operating expenses.
OUR OPERATING RESULTS FLUCTUATE AND OUR STOCK PRICE MAY BE VOLATILE AS A RESULT
Our revenues and earnings may fluctuate from quarter to quarter based on a
variety of factors, many of which are beyond our control. The factors include,
but are not limited to:
- the timing and size of new and renewal memberships for our research from
clients;
- the timing of revenue-generating Forum events sponsored by us;
- the utilization of our advisory services by our clients;
- the introduction and marketing of new products and services by us and our
competitors;
- the hiring and training of new analysts and sales personnel;
- changes in demand for our research; and
- general economic conditions.
As a result, our operating results in future quarters may be below the
expectations of securities analysts and investors which could have an adverse
effect on the market price for our
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common stock. Factors such as announcements of new products, services, offices
or strategic alliances by us or our competitors, as well as market conditions in
the Internet and emerging technologies services industry, may have a significant
impact on the market price of our common stock. The market price for our common
stock may also be affected by movements in prices of stocks in general.
A DECLINE IN RENEWALS FOR OUR MEMBERSHIP-BASED RESEARCH SERVICES COULD ADVERSELY
AFFECT OUR REVENUES
Our success depends in large part upon renewals of memberships for our
research products. Approximately 74% of our revenues in the year ended December
31, 1999 were derived from our membership-based research products. In addition,
approximately 74% of our client companies with memberships expiring during this
period renewed one or more memberships for our products and services. A
significant decline in renewal rates for our research products could have an
adverse effect on our revenues.
LOSS OF KEY MANAGEMENT COULD AFFECT OUR ABILITY TO RUN OUR BUSINESS
Our future success will depend in large part upon the continued services of
a number of our key management employees. The loss of any one of them, in
particular George F. Colony, our founder and Chairman, President and Chief
Executive Officer, could adversely affect our business.
IF WE DO NOT ANTICIPATE AND RESPOND TO MARKET TRENDS, WE MAY NOT REMAIN
COMPETITIVE
Our success depends in part upon our ability to anticipate rapidly changing
technologies and market trends and to adapt our research to meet the changing
information needs of our clients. The technology and commerce sectors that we
analyze undergo frequent and often dramatic changes. The changes include:
- the introduction of new products and obsolescence of others;
- the use of technology to transform existing and create new business
models;
- shifting strategies and market positions of major industry participants;
- paradigm shifts in system architectures; and
- changing objectives and expectations of users of technology.
The environment of rapid and continuous change presents significant
challenges to our ability to provide our clients with current and timely
analysis, strategies and advice on issues of importance to them. Meeting these
challenges requires the commitment of substantial resources. Any failure to
continue to provide insightful and timely analysis of developments, technologies
and trends in a manner that meets market needs could have an adverse effect on
our market position and results of operations.
IF WE DO NOT DEVELOP AND OFFER NEW PRODUCTS AND SERVICES, WE COULD LOSE OUR
COMPETITIVE POSITION AND FAIL TO GROW OUR BUSINESS
Our future success will depend in part on our ability to offer new products
and services. These new products and services must successfully gain market
acceptance by addressing specific industry and business organization sectors,
anticipating and identifying changes in client requirements and changes in the
technology industry. The process of internally researching, developing,
launching and gaining client acceptance of a new product or service, or
assimilating and marketing an acquired product or service, is risky and costly.
We may not be able to introduce new, or assimilate acquired, products or
services successfully. Our failure to do so would adversely affect our ability
to maintain a competitive position in our market and continue to grow our
business.
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THE MARKET FOR RESEARCH PRODUCTS AND SERVICES IS COMPETITIVE AND IF WE FAIL TO
COMPETE EFFECTIVELY, WE COULD LOSE OUR MARKET POSITION
We compete in the market for research products and services with other
independent providers of similar services. We may also face increased
competition from Internet-based research firms. Some of our competitors have
substantially greater financial, information-gathering and marketing resources
than we do. In addition, our indirect competitors include the internal planning
and marketing staffs of our current and prospective clients, as well as other
information providers such as electronic and print publishing companies,
survey-based general market research firms and general business consulting
firms. Our indirect competitors may choose to compete directly against us in the
future. In addition, there are relatively few barriers to entry into our market
and new competitors could readily seek to compete against us in one or more
market segments addressed by our products and services. Increased competition
could adversely affect our operating results through pricing pressure and loss
of market share.
IF WE FAIL TO INTEGRATE OUR RECENTLY COMPLETED ACQUISITION EFFECTIVELY, IT COULD
ADVERSELY AFFECT OUR OPERATING EXPENSES AND COULD CAUSE US TO FAIL TO ACHIEVE
THE BENEFITS WE EXPECTED
We recently acquired Fletcher Research Limited, an Internet research
company located in the United Kingdom. It was our first acquisition and our
management has had no experience to date integrating acquisitions into our
business. The integration of any acquisition can be disruptive, divert
management time and attention and result in a failure to realize the expected
benefits of the acquisition. The problems may be accentuated where the acquired
company is foreign and located far from our headquarters. If we do not integrate
the Fletcher acquisition effectively, we could fail to achieve the benefits we
expected.
OUR CHAIRMAN AND CEO HAS SIGNIFICANT VOTING POWER AND MAY EFFECTIVELY CONTROL
THE OUTCOME OF ANY STOCKHOLDER VOTE
George F. Colony, our Chairman, President and Chief Executive Officer,
beneficially owns approximately 46% of our common stock. As a result, he has the
ability to substantially influence, and may effectively control, the outcome of
corporate actions requiring stockholder approval, including the election of
directors. This concentration of ownership may also have the effect of delaying
or preventing a change in control of Forrester even if such a change of control
would benefit other investors.
OUR CORPORATE GOVERNANCE PROVISIONS MAY DETER A FINANCIALLY ATTRACTIVE TAKEOVER
ATTEMPT
Provisions of our charter and by-laws may discourage, delay or prevent a
merger or acquisition that stockholders may consider favorable, including
transactions in which stockholders would receive a premium for their shares.
These provisions include the following:
- any action to be taken by stockholders must be taken at a meeting and may
not be taken by written consent;
- stockholders must comply with advance notice requirements before raising
a matter at a meeting of stockholders or nominating a director for
election;
- only our chairman, chief executive officer or, if there is none, the
president or the board of directors may call a special meeting of
stockholders;
- our board of directors is divided into three classes and the members may
be removed by the stockholders only for cause; and
- our board of directors has the authority, without further action by the
stockholders, to fix the rights and preferences of and issue shares of
preferred stock.
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