Plantronics 2015 Annual Report Download - page 24

• Failure of UC solutions generally, or our solutions in particular, to be adopted with the breadth and speed that we currently
anticipate. For example, concerns about the security of information and data stored over the Internet and wireless security
in general, each of which is further enabled by UC solutions, including our products, have caused entities in various
markets to reassess the security of UC devices.
• Failure of our sales model and expertise to support complex integration of hardware and software with UC infrastructure
consistent with changing customer purchasing expectations.
• If new or evolving sales models such as our Device-as-a-Service offering in which we provide headsets to UC end
customers on a subscription basis through channel partners are successful, they may have a long-term positive effect on
our operations; however differences in revenue-recognition treatment may cause short-term revenue declines or increase
expenditures that may adversely impact our operations or negatively reflect on our overall growth.
• Increased competition for market share, particularly given that some competitors have superior technical and economic
resources enabling them to take greater advantage of UC market opportunities.
• Sales cycles for more complex UC deployments are longer as compared to our traditional Enterprise products.
• Our inability to timely and cost-effectively adapt to changes and future requirements of UC may impact our profitability
in this market and our overall margins.
• Failure to expand our technical support capabilities to support the complex and proprietary platforms in which our UC
products are and will be integrated as well as increases in our support expenditures over time.
If our investments in, and strategic focus on, UC does not generate incremental revenue, our business, financial condition, and
results of operations could be materially adversely affected.
If we fail to accurately forecast demand we may under or overestimate production requirements resulting in lost business or
write offs of excess inventory which may materially harm our business, reputation and results of operations.
Our industry is characterized by rapid technological changes, evolving industry standards, frequent new product introductions,
short-term customer commitments, and changes in demand. Production levels are forecasted based on anticipated and historic
product demand and we often place orders for materials and components as well as finished products with our suppliers 13 weeks
or more in advance of projected orders from our customers. Actual demand depends on many factors and may vary significantly
from our forecasts. We will lose opportunities to increase revenues and profits and may incur increased costs and penalties including
expedited shipping fees and late delivery penalties if we underestimate customer demand.
Conversely, overestimating demand could result in higher inventories of raw materials, components, and sub-assemblies ("materials
and components") and finished products, which may later require us to write off all or a material portion of our inventories. We
routinely review inventory for usage potential, including fulfillment of customer warranty obligations and spare part requirements,
and we write down to the lower of cost or market value the excess and obsolete inventory, which may adversely affect our results
of operations.
For instance, periodically, we or our competitors announce new products, capabilities, or technologies that replace or shorten the
life cycles of legacy products or cause customers to defer or stop purchasing legacy products until new products become available.
Additionally, new product announcements may incite customers to increase purchases of successful legacy products as part of a
last-time buy strategy, thereby increasing sales in the short-term while decreasing future sales by delaying new product adoption.
These risks increase the difficulty of accurately forecasting demand for discontinued and new products. Accordingly, during any
transition to new products, we may experience inventory obsolescence and loss of revenue and associated gross profit.
If any of the above occur, our business, financial condition and results of operations could be materially harmed.
If our suppliers and sub-suppliers cannot timely deliver sufficient quantities of quality materials and components and finished
products, our ability to fulfill customer demand may be adversely impacted and our growth, business, reputation and financial
condition may be materially adversely effected.
Our growth and ability to meet customer demand depends in part on our ability to timely obtain sufficient quantities of materials
and components as well as finished products of acceptable quality at acceptable prices. We buy materials and components from
a variety of suppliers and assemble them into finished products. In addition, certain of our products and key portions of our
products lines are manufactured for us by third party original design and contract manufacturers ("ODMs") who obtain materials
and sub-components from a long and often complex chain of sub-suppliers. The cost, quality, and availability of the services,
materials and components and finished products these ODMs and third parties supply are essential to our success.
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