Plantronics 2015 Annual Report Download - page 29

As a result of the evolution of our consumer business, our customer mix is changing, and certain retailers, OEMs, and wireless
carriers are more significant. In particular, we have several large customers whose order patterns are difficult to predict. Offers
and promotions by these customers may result in significant fluctuations in their purchasing activities over time, which may
increase the volatility of our revenues. If we are unable to correctly anticipate the quantities and timing of their purchase
requirements, our revenues may be adversely affected, or we may be left holding large volumes of inventory that cannot be sold
to other customers.
Also, in order to provide us with greater insight and control over our channels, we implemented an authorization program in which
distributors and resellers are asked to enter into agreements or supplement existing agreements in connection with the sale of all
or a portion of our products. Our partners may deem the program difficult, time-consuming or disruptive, or the terms of the
program or our agreements unacceptable.
Additionally, we have implemented an electronic minimum advertised pricing policy applicable to a number of new and future
products as well as certain legacy products. The policy allows us to limit and reject orders from resellers who fail to promote and
maintain the premium image of our brand and products by advertising online prices for covered products below prices we establish
and periodically adjust. Enforcement of the policy may result in lost sales and harm our business relationships and reputation,
potentially materially, with one or more customers or resellers.
If the number and quality of our distributors and resellers declines, our business, financial condition, and results of operations
could be materially, adversely affected.
The increased use of software in our products or as standalone applications could impact the way we recognize revenue which,
if material or done incorrectly, could adversely affect our financial results.
We are increasingly incorporating software features and functionalities into our products, offering firmware and software fixes,
updates, and upgrades electronically over the Internet and developing standalone software applications. As the nature and extent
of software integration in our products increases or if sales of standalone software applications become material, the way we report
revenue related to our products could be significantly affected. For example, we are increasingly required to evaluate whether
our revenue transactions include multiple deliverables and, as such, whether the revenue generated by each transaction should be
recognized upon delivery, over a period of time or apportioned and recognized based on a combination of the two in light of all
the facts and circumstances related to each transaction. Moreover, the software revenue recognition rules are complex and dynamic.
If we fail to accurately apply these complex rules and policies, we may incorrectly report revenues in one or more reporting periods.
If this were to occur and the error was material, we may be required to restate our financial statements, which could materially
and adversely impact our results for the affected periods, cause our stock price to decline, and result in securities class actions or
other similar litigation.
Our intellectual property rights could be infringed on by others, and we may infringe on the intellectual property rights of
others resulting in claims or lawsuits. Even if we prevail, claims and lawsuits are costly and time consuming to pursue or
defend and may divert management's time from our business.
Our success depends in part on our ability to protect our copyrights, patents, trademarks, trade dress, trade secrets, and other
intellectual property, including our rights to certain domain names. We rely primarily on a combination of nondisclosure agreements
and other contractual provisions as well as patent, trademark, trade secret, and copyright laws to protect our proprietary rights.
Effective trademark, patent, copyright, and trade secret protection and enforcement may not be available in every country in which
our products and media properties are distributed to customers. The process of seeking intellectual property protection can be
lengthy, expensive, and uncertain. Patents may not be issued in response to our applications, and any patents that may be issued
may be invalidated, circumvented, or challenged by others. If we are required to enforce our intellectual property or other proprietary
rights through litigation, the costs and diversion of management's attention could be substantial. Furthermore, we may be
countersued by an actual or alleged infringer if we attempt to enforce our intellectual property rights, which may materially increase
our costs, divert management attention, and result in injunctive or financial damages being awarded against us. In addition, the
existing patents, copyright registrations, trademarks, trade secrets and domain names may not provide us competitive advantages
or be adequate to safeguard and maintain our proprietary rights. If it is not feasible or possible to obtain, enforce, or protect our
intellectual property rights, our business, financial condition, and results of operations could be materially, adversely affected.
17