Audiovox 2003 Annual Report Download - page 20
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companies have substantially greater financial and other resources than we do.
We believe that OEMs have increased sales pressure on new car dealers with whom
they have close business relationships to purchase OEM−supplied equipment and
accessories. OEMs have also diversified and improved their product lines and
accessories in an effort to increase sales of their products. To the extent that
OEMs succeed in their efforts, this success would have a material adverse effect
on our sales of automotive entertainment and security products to new car
dealers.
Wireless Carriers and Suppliers May Not Continue to Outsource Value−Added
Services; We May Not Be Able to Continue to Provide Competitive Value−Added
Services.
Wireless carriers purchase from us, rather than directly from our
suppliers, because, among other reasons, we provide added services valued by our
customers. In order to maintain our sales levels, we must continue to provide
these value−added services at reasonable costs to our carrier−customers and
suppliers, including:
o product sourcing
o product distribution
o marketing
o custom packaging
o warranty support
o programming wireless handsets
o testing for carrier system acceptance
Our success depends on the wireless equipment manufacturers, wireless
carriers, network operators and resellers continuing to outsource these
functions rather than performing them in−house. To encourage the use of our
services, we must keep our prices reasonable. If our internal costs of supplying
these services increase, we may not be able to raise our prices to pass these
costs along to our customers and suppliers. As a result of the consolidations in
the telecommunications industry, wireless carriers, which are the largest
customers of our wireless business, may attempt to perform these services
themselves. Alternatively, our customers and suppliers may transact business
directly with each other rather than through us. If our customers or suppliers
begin to perform these services internally or do business directly with each
other, it could have a material adverse effect on our sales and our profits.
Our Success Depends on Our Ability to Keep Pace with Technological Advances in
the Wireless Industry.
Rapid technological change and frequent new product introductions
characterize the wireless product market. Our success depends upon our ability
to:
o identify the new products necessary to meet the demands of the
wireless marketplace and
o locate suppliers who are able to manufacture those products on a
timely and cost−effective basis.
Since we do not make any of our own products and do not conduct our own
research, we cannot assure you that we will be able to source the products that
advances in technology require to remain competitive. Furthermore, the
introduction or expected introduction of new products or technologies may
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