8x8 2001 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 of the 2001 8x8 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 93

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93

OUR FUTURE OPERATING RESULTS MAY NOT FOLLOW PAST OR EXPECTED TRENDS DUE TO MANY FACTORS AND
ANY OF THESE COULD CAUSE OUR STOCK PRICE TO FALL
Our historical operating results have fluctuated significantly and will likely continue to fluctuate in the future, and a decline in our operating
results could cause our stock price to fall. On an annual and a quarterly basis, there are a number of factors that may affect our operating
results, many of which are outside our control. These include, but are not limited to:
- changes in market demand;
- the timing of customer orders;
- competitive market conditions;
- lengthy sales cycles and/or regulatory approval cycles;
- new product introductions by us or our competitors;
- market acceptance of new or existing products;
- the cost and availability of components;
- the mix of our customer base and sales channels;
- the mix of products sold;
- the management of inventory;
- the level of international sales;
- continued compliance with industry standards; and
- general economic conditions.
Our gross margin is affected by a number of factors including, product mix, the recognition of license and other revenues for which there may
be little or no corresponding cost of revenues, product pricing, the allocation between international and domestic sales, the percentage of direct
sales and sales to resellers, and manufacturing and component costs. The markets for our products are characterized by falling average selling
prices. We expect that, as a result of competitive pressures and other factors, gross profit as a percentage of revenue for our videoconferencing
semiconductors have been lower than those historically attained for our multimedia communication semiconductor products resulting in lower
gross margins. In the likely event that we encounter significant price competition in the markets for our products, we could be at a significant
disadvantage compared to our competitors, many of whom have substantially greater resources, and therefore may be better able to withstand
an extended period of downward pricing pressure.
Variations in timing of sales may cause significant fluctuations in future operating results. In addition, because a significant portion of our
business may be derived from orders placed by a limited number of large customers, including OEM customers, the timing of such orders can
also cause significant fluctuations in our operating results. Anticipated orders from customers may fail to materialize. Delivery schedules may
be deferred or canceled for a number of reasons, including changes in specific customer requirements or international economic conditions.
The adverse impact of a shortfall in our revenues may be magnified by our inability to adjust spending to compensate for such shortfall.
Announcements by our competitors or us of new products and technologies could cause customers to defer purchases of our existing products,
which would also have a material adverse effect on our business and operating results.
As a result of these and other factors, it is likely that in some or all future periods our operating results will be below the expectations of
securities analysts or investors, which would likely result in a significant reduction in the market price of our common stock.
24