Plantronics 2008 Annual Report Download - page 25

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significant marketing investments. Motorola also benefits from the ability to bundle other offerings with their headsets. We are also
experiencing additional competition from other consumer electronics companies that currently manufacture and sell mobile phones or
computer peripheral equipment. These competitors generally are larger, offer broader product lines, bundle or integrate with other
products’ communications headset tops and bases manufactured by them or others, offer products containing bases that are
incompatible with our headset tops and have substantially greater financial, marketing and other resources than we do.
Competitors in audio devices vary by product line. The most competitive product line is headsets for cell phones where we compete
with Motorola, Nokia, GN’s Jabra brand, Sony Ericsson, Samsung, Jawbone, and Belkin among many others. Many of these
competitors have substantially greater resources than we have, and each of whom has established market positions in this business. In
the PC and office and contact center markets, the largest competitor is GN, as well as Sennheiser Communications. For PC and
gaming headset applications, our primary competitor is Logitech. In the Audio Entertainment business, competitors include Bose,
Apple, Logitech, Creative Labs, iHome, and Harman International.
Our product markets are intensely competitive and market leadership changes frequently as a result of new products, designs and
pricing. We also expect to face additional competition from companies, principally located in Asia Pacific, which offer very low cost
headset products, including products that are modeled on, or are direct copies of our products. These new competitors are likely to
offer very low cost products, which may result in pricing pressure in the market. If market prices are substantially reduced by such
new entrants into the headset market, our business, financial condition or results of operations could be materially adversely affected.
If we do not continue to distinguish our products, particularly our retail products, through distinctive, technologically advanced
features, and design, as well as continue to build and strengthen our brand recognition, our business could be harmed. If we do not
otherwise compete effectively, demand for our products could decline, our gross margins could decrease, we could lose market share,
and our revenues and earnings could decline.
We are subject to environmental laws and regulations which expose us to a number of risks and could result in significant
liabilities and costs.
There are multiple initiatives in several jurisdictions regarding the removal of certain potential environmentally sensitive materials
from our products to comply with the European Union and other Directives on Restrictions on certain Hazardous Substances on
electrical and electronic equipment (“ROHS”) and on Waste Electrical and Electronic Equipment (“WEEE”). In certain jurisdictions
the ROHS legislation was enacted as of July 1, 2006; however, other jurisdictions have delayed implementation. While we believe that
we will have the resources and ability to fully meet the requirements of the ROHS and WEEE directives universally, if unusual
occurrences arise, or, if we are wrong in our assessment of what it will take to fully comply, there is a risk that we will not be able to
comply with the legislation as passed by the EU member states or other global jurisdictions. If that were to happen, a material negative
effect on our financial results may occur.
We are subject to various federal, state, local and foreign environmental laws and regulations on a global basis, including those
governing the use, discharge and disposal of hazardous substances in the ordinary course of our manufacturing process. Although we
believe that our current manufacturing operations comply in all material respects with applicable environmental laws and regulations,
it is possible that future environmental legislation may be enacted or current environmental legislation may be interpreted in any given
country to create environmental liability with respect to our facilities, operations, or products. To the extent that we incur claims for
environmental matters exceeding reserves or insurance for environmental liability, our operating results could be negatively impacted.
Our products are subject to various regulatory requirements, and changes in such regulatory requirements may adversely impact
our gross margins as we comply with such changes or reduce our ability to generate revenues if we are unable to comply.
Our products must meet the requirements set by regulatory authorities in the numerous jurisdictions in which we sell them. For
example, certain of our office and contact center products must meet certain standards to work with local phone systems. Certain of
our wireless office and mobile products must work within existing frequency ranges permitted in various jurisdictions. As regulations
and local laws change, we must modify our products to address those changes. Regulatory restrictions may increase the costs to
design, manufacture and sell our products, resulting in a decrease in our margins or a decrease in demand for our products if the costs
are passed along. Compliance with regulatory restrictions may impact the technical quality and capabilities of our products reducing
their marketability.
Our stock price may be volatile and the value of your investment in Plantronics stock could be diminished.
The market price for our common stock may continue to be affected by a number of factors, including: