Garmin 2009 Annual Report Download - page 44

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BestBuyisourlargestcustomerandaccountedfor13.4%and12.0%ofourtotalnetsalesin2009and
2008,respectively.IfBestBuy’sbusinessdeclinesduetotheeconomicconditions,marketsharelossesorother
factors,ourrevenuesandprofitabilitywillbeadverselyimpacted.Inaddition,ifBestBuy’sliquidityerodesforany
ofthereasonsdiscussedaboveoratighteninginthecreditmarketsandtheyareunwillingorunabletopayus
amountsowedtimely,ourprofitabilitywillbeadverselyimpacted.
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Ifwearenotsuccessfulinthecontinueddevelopment,introductionortimelymanufactureofnewproducts,
demandforourproductscoulddecrease.
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Weexpectthatasignificantportionofourfuturerevenuewillcontinuetobederivedfromsalesofnewly
introducedproducts.Themarketforourproductsischaracterizedbyrapidlychangingtechnology,evolving
industrystandardsandchangesincustomerneeds.Ifwefailtointroducenewproducts,ortomodifyorimprove
ourexistingproducts,inresponsetochangesintechnology,industrystandardsorcustomerneeds,ourproducts
couldrapidlybecomelesscompetitiveorobsolete.Wemustcontinuetomakesignificantinvestmentsinresearch
anddevelopmentinordertocontinuetodevelopnewproducts,enhanceexistingproductsandachievemarket
acceptanceforsuchproducts.However,therecanbenoassurancethatdevelopmentstageproductswillbe
successfullycompletedor,ifdeveloped,willachievesignificantcustomeracceptance.
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Ifweareunabletosuccessfullydevelopandintroducecompetitivenewproducts,andenhanceour
existingproducts,ourfutureresultsofoperationswouldbeadverselyaffected.Ourpursuitofnecessary
technologymayrequiresubstantialtimeandexpense.Wemayneedtolicensenewtechnologiestorespondto
technologicalchange.Theselicensesmaynotbeavailabletousontermsthatwecanacceptormaymaterially
changethegrossprofitsthatweareabletoobtainonourproducts.Wemaynotsucceedinadaptingourproducts
tonewtechnologiesastheyemerge.Developmentandmanufacturingschedulesfortechnologyproductsare
difficulttopredict,andtherecanbenoassurancethatwewillachievetimelyinitialcustomershipmentsofnew
products.Thetimelyavailabilityoftheseproductsinvolumeandtheiracceptancebycustomersareimportantto
ourfuturesuccess.Fromtimetotimewehaveexperienceddelaysinshippingcertainofournewproductsandany
futuredelays,whetherduetoproductdevelopmentdelays,manufacturingdelays,lackofmarketacceptance,
delaysinregulatoryapproval,orotherwise,couldhaveamaterialadverseeffectonourresultsofoperations.
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Ifweareunabletocompeteeffectivelywithexistingornewcompetitors,ourresultinglossofcompetitive
positioncouldresultinpricereductions,fewercustomerorders,reducedmarginsandlossofmarketshare.
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Themarketsforourproductsarehighlycompetitive,andweexpectcompetitiontoincreaseinthefuture.
Someofourcompetitorshavesignificantlygreaterfinancial,technicalandmarketingresourcesthanwedo.These
competitorsmaybeabletorespondmorerapidlytoneworemergingtechnologiesorchangesincustomer
requirements.Theymayalsobeabletodevotegreaterresourcestothedevelopment,promotionandsaleoftheir
products.Increasedcompetitioncouldresultinpricereductions,fewercustomerorders,reducedmarginsand
lossofmarketshare.Ourfailuretocompetesuccessfullyagainstcurrentorfuturecompetitorscouldseriously
harmourbusiness,financialconditionandresultsofoperations.
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Werelyonindependentdealersanddistributorstosellourproducts,anddisruptiontothesechannelswould
harmourbusiness.
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Becausewesellamajorityofourproductstoindependentdealersanddistributors,wearesubjectto
manyrisks,includingrisksrelatedtotheirinventorylevelsandsupportforourproducts.Inparticular,ourdealers
anddistributorsmaintainsignificantlevelsofourproductsintheirinventories.Ifdealersanddistributorsattempt
toreducetheirlevelsofinventoryoriftheydonotmaintainsufficientlevelstomeetcustomerdemand,oursales
couldbenegativelyimpacted.
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Manyofourdealersanddistributorsalsosellproductsofferedbyourcompetitors.Ifourcompetitors
offerourdealersanddistributorsmorefavorableterms,thosedealersanddistributorsmayde‐emphasizeor
declinetocarryourproducts.Inthefuture,wemaynotbeabletoretainorattractasufficientnumberofqualified