Adaptec 2003 Annual Report Download - page 43

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The complexity of our products could result in unforeseen delays or expenses and in undetected defects or bugs, which could
adversely affect the market acceptance of new products and damage our reputation with current or prospective customers.
Although we, or our customers and our suppliers rigorously test our products, our highly complex products regularly contain defects
or bugs. We have in the past experienced, and may in the future experience, these defects and bugs. If any of our products contain
defects or bugs, or have reliability, quality or compatibility problems that are significant to our customers, our reputation may be
damaged and customers may be reluctant to buy our products. This could materially and adversely affect our ability to retain existing
customers or attract new customers. In addition, these defects or bugs could interrupt or delay sales to our customers.
We may have to invest significant capital and other resources to alleviate problems with our products. If any of these problems are not
found until after we have commenced commercial production of a new product, we may be required to incur additional development
costs and product recall, repair or replacement costs. These problems may also result in claims against us by our customers or others.
In addition, these problems may divert our technical and other resources from other development efforts. Moreover, we would likely
lose, or experience a delay in, market acceptance of the affected product or products, and we could lose credibility with our current
and prospective customers.
We may be unsuccessful in transitioning the design of our new products to new manufacturing processes.
Many of our new products are designed to take advantage of new manufacturing processes offering smaller manufacturing geometries
as they become available, as the smaller geometry products can provide a product with improved features such as lower power
requirements, increased performance, more functionality and lower cost. We believe that the transition of our products to smaller
geometries is critical for us to remain competitive. We could experience difficulties in migrating to future geometries or
manufacturing processes, which would result in the delay of the production of our products. Our products may become obsolete
during these delays, or allow competitors’ parts to be chosen by customers during the design process.
Our business strategy contemplates acquisition of other companies or technologies, which could adversely affect our operating
performance.
Acquiring products, technologies or businesses from third parties is part of our business strategy. Management may be diverted from
our operations while they identify and negotiate these acquisitions and integrate an acquired entity into our operations. Also, we may
be forced to develop expertise outside our existing businesses, and replace key personnel who leave due to an acquisition.
An acquisition could absorb substantial cash resources, require us to incur or assume debt obligations, or issue additional equity. If we
issue more equity, we may dilute our common stock with securities that have an equal or a senior interest.
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