Plantronics 2010 Annual Report Download - page 23

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Prices of certain raw materials, components and sub-assemblies may rise or fall depending upon global market conditions.
We have experienced volatility in costs from our suppliers, particularly in light of the price fluctuations of oil and other products in the
U.S. and around the world. We may continue to experience volatility which could affect profitability and/or market share. If we
experience cost increases and are unable to pass these on to our customers or to achieve operating efficiencies that offset these
increases, our business, financial condition and results of operations may be materially and adversely affected.
The failure of our suppliers to provide quality components or services in a timely manner could adversely affect our results.
Our growth and ability to meet customer demand depends in part on our ability to obtain timely deliveries of raw materials,
components, sub-assemblies, and products from our suppliers. We buy raw materials, components and sub-assemblies from a variety
of suppliers and assemble them into finished products. We also have certain of our products manufactured for us by third party
suppliers. The cost, quality, and availability of such goods are essential to the successful production and sale of our products.
Obtaining raw materials, components, sub-assemblies, and finished products entails various risks, including the following:
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x Rapid increases in production levels to meet unanticipated demand for our products could result in higher costs for
components and sub-assemblies, increased expenditures for freight to expedite delivery of required materials, and higher
overtime costs and other expenses. These higher expenditures could lower our profit margins. Further, if production is
increased rapidly, there may be decreased manufacturing yields, which may also lower our margins.
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x We obtain certain raw materials, sub-assemblies, components and products from single suppliers, including substantially
all of our Bluetooth products from GoerTek, Inc. Alternate sources for these items may not be readily available. Any
failure of our suppliers to remain in business, to provide us with the quantity of components or products that we need or
to purchase the raw materials, subcomponents and parts required by them to produce and provide to us the components
or products we need could materially adversely affect our business, financial condition and results of operations.
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x Although we generally use standard raw materials, parts and components for our products, the high development costs
associated with emerging wireless technologies require us to work with only a single source of silicon chip-sets on any
particular new product. We, or our supplier(s) of chip-sets, may experience challenges in designing, developing and
manufacturing components in these new technologies which could affect our ability to meet market schedules. Due to
our dependence on single suppliers for certain chip-sets, we could experience higher prices, a delay in development of
the chip-set, or the inability to meet our customer demand for these new products. Additionally, these suppliers or other
suppliers may enter into bankruptcy, discontinue production of the parts we depend on or may not be able to produce due
to financial difficulties or the global recession. If this occurs, we may have difficulty obtaining sufficient product to
meet our needs. This could cause us to fail to meet customer expectations. If customers turn to our competitors to meet
their needs, there could be a long-term adverse impact on our revenues and profitability. Our business, operating results
and financial condition could therefore be materially adversely affected as a result of these factors.
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x Because of the lead times required to obtain certain raw materials, sub-assemblies, components and products from
certain foreign suppliers, we may not be able to react quickly to changes in demand, potentially resulting in either excess
inventories of such goods or shortages of the raw materials, sub-assemblies, components, and products. Lead times are
particularly long on silicon-based components incorporating radio frequency and digital signal processing technologies
and such components are an increasingly important part of our product costs. In particular, many consumer product
orders have shorter lead times than the component lead times, making it increasingly necessary to carry more inventory
in anticipation of those orders, which may not materialize. Failure in the future to match the timing of purchases of raw
materials, sub-assemblies, components and products to demand could increase our inventories and/or decrease our
revenues and could materially adversely affect our business, financial condition and results of operations.
x Most of our suppliers are not obligated to continue to provide us with raw materials, components, and sub-assemblies.
Rather, we buy most of our raw materials, components and subassemblies on a purchase order basis. If our suppliers
experience increased demand or shortages, it could affect deliveries to us. In turn, this would affect our ability to
manufacture and sell products that are dependent on those raw materials, components, and subassemblies. Any such
shortages would materially adversely affect our business, financial condition, and results of operations.