SanDisk 2006 Annual Report Download - page 71

Our stock price has been, and may continue to be, volatile, which could result in investors losing all or part of
their investments. The market price of our stock has fluctuated significantly in the past and may continue to
fluctuate in the future. We believe that such fluctuations will continue as a result of many factors, including future
announcements concerning us, our competitors or principal customers regarding financial results or expectations,
technological innovations, industry supply dynamics, new product introductions, governmental regulations, the
commencement or results of litigation or changes in earnings estimates by analysts. In addition, in recent years the
stock market has experienced significant price and volume fluctuations and the market prices of the securities of
high technology and semiconductor companies have been especially volatile, often for reasons outside the control
of the particular companies. These fluctuations as well as general economic, political and market conditions may
have an adverse affect on the market price of our common stock as well as the price of our outstanding convertible
notes and could impact the likelihood of those notes being converted into our common stock, which would cause
further dilution to our stockholders.
We may make acquisitions that are dilutive to existing stockholders, result in unanticipated accounting charges
or otherwise adversely affect our results of operations, and result in difficulties in assimilating and integrating the
operations, personnel, technologies, products and information systems of acquired companies or businesses. We
continually evaluate and explore strategic opportunities as they arise, including business combinations, strategic
partnerships, collaborations, capital investments and the purchase, licensing or sale of assets. If we issue equity
securities in connection with an acquisition, the issuance may be dilutive to our existing stockholders. Alternatively,
acquisitions made entirely or partially for cash would reduce our cash reserves.
Acquisitions may require significant capital infusions, typically entail many risks and could result in
difficulties in assimilating and integrating the operations, personnel, technologies, products and information
systems of acquired companies. In order to realize the intended benefits of our recent acquisitions of msystems and
Matrix, we will have to successfully integrate and retain key msystems and Matrix personnel. We may experience
delays in the timing and successful integration of acquired technologies and product development through volume
production, unanticipated costs and expenditures, changing relationships with customers, suppliers and strategic
partners, or contractual, intellectual property or employment issues. In addition, key personnel of an acquired
company may decide not to work for us. The acquisition of another company or its products and technologies may
also result in our entering into a geographic or business market in which we have little or no prior experience. These
challenges could disrupt our ongoing business, distract our management and employees, harm our reputation,
subject us to an increased risk of intellectual property and other litigation and increase our expenses. These
challenges are magnified as the size of the acquisition increases, and we cannot assure you that we will realize the
intended benefits of any acquisition. Acquisitions may require large one-time charges and can result in increased
debt or contingent liabilities, adverse tax consequences, substantial depreciation or deferred compensation charges,
the amortization of identifiable purchased intangible assets or impairment of goodwill, any of which could have a
material adverse effect on our business, financial condition or results of operations.
Mergers and acquisitions of high-technology companies are inherently risky and subject to many factors
outside of our control, and no assurance can be given that our previous or future acquisitions will be successful and
will not materially adversely affect our business, operating results, or financial condition. Failure to manage and
successfully integrate acquisitions could materially harm our business and operating results. Even when an acquired
company has already developed and marketed products, there can be no assurance that such products will be
successful after the closing, will not cannibalize sales of our existing products, that product enhancements will be
made in a timely fashion or that pre-acquisition due diligence will have identified all possible issues that might arise
with respect to such company. See “There are numerous risks associated with our acquisition of msystems.”
Our success depends on key personnel, including our executive officers, the loss of whom could disrupt our
business. Our success greatly depends on the continued contributions of our senior management and other key
research and development, sales, marketing and operations personnel, including Dr. Eli Harari, our founder,
president and chief executive officer. We do not have employment agreements with any of our executive officers and
they are free to terminate their employment with us at any time. Our success will also depend on our ability to recruit
additional highly skilled personnel. We may not be successful in hiring or retaining key personnel and our key
personnel may not remain employed with us.
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