8x8 2006 Annual Report Download - page 4

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PART I
ITEM 1. BUSINESS
Forward-Looking Statements and Risk Factors
Statements contained in this annual report on Form 10-K, or Annual Report, regarding our expectations, beliefs,
estimates, intentions or strategies are forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act and include statements regarding our expectation concerning
the adequacy of our facilities; our estimates of litigation exposure and our beliefs about the sufficiency of our
supplier arrangements. All forward-looking statements included in this Report are based on information available to
us on the date hereof, and we assume no obligation to update any such forward-looking statements. You should not
place undue reliance on these forward-looking statements. Actual results could differ materially from those
anticipated in these forward-looking statements as a result of a number of factors, including a shifting of internal
research and development focus based on changes in the market or adequacy of funding; a failure of customers to
adopt voice and video over internet protocol technology or advances in competing systems and services; our
business may grow in an unanticipated manner causing us to require different types of facilities; ordinary course
litigation may cause a greater than anticipated impact due to factual matters or issues beyond our control; and our
ability to source our products may be interrupted if our manufacturers cease operations or no longer desire to do
business with us. Please also see the section entitled "Risk Factors" for additional risks that may impact our
business. We undertake no obligation to revise or update any forward-looking statements in order to reflect any
event or circumstance that may arise after the date of this Annual Report. Readers are urged to carefully review and
consider the various disclosures made in this Annual Report, which attempt to advise interested parties of the risks
and factors that may affect our business, financial condition, results of operations and prospects.
Our fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in this Annual Report, refers
to the fiscal year ending March 31 of the calendar year indicated (for example, fiscal 2006 refers to the fiscal year
ended March 31, 2006). Unless the context requires otherwise, references to “we,” “us,” “our,” “8x8” and the
“Company” refer to 8x8, Inc. and its consolidated subsidiaries.
Overview
We develop, market and sell telecommunication services and technology for Internet protocol, or IP, telephony and
video applications. We offer the Packet8 broadband voice over Internet protocol, or VoIP, phone service, Packet8
Virtual Office service and Packet8 videophone equipment and service. We shipped our first VoIP product in 1998,
launched our Packet8 service in November 2002, launched the Packet8 Virtual Office business service in March
2004 and launched the Packet8 videophone service in June 2004. As of March 31, 2006, we had approximately
133,000 Packet8 lines in service. Lines in service represent subscriber lines of our residential, business and
videophone subscribers and include toll-free and virtual phone numbers.
The Packet8 voice and video broadband phone service (Packet8) enables broadband Internet users to add digital
voice and video communications services to their high-speed Internet connection. Customers can choose a direct-
dial phone number from any of the rate centers offered by the service, and then use an 8x8-supplied terminal adapter
to connect any telephone to a broadband Internet connection and make or receive calls from a regular telephone
number. All Packet8 telephone accounts come with voice mail, caller ID, call waiting, call waiting caller ID, call
forwarding, hold, line-alternate, 3-way conferencing, web and voice-prompt access to account controls, and online
billing. In addition, we offer a videophone in conjunction with our video service plans that connects to a customer’s
high-speed Internet connection to deliver all of the voice features above, as well as unlimited video calls to any other
Packet8 videophone customer in the world. We also offer IP telephones with built-in connectivity to Packet8 via an
IP connector on the phone. We also sell pre-programmed analog telephones with speakerphones and a display
screen, in conjunction with our Virtual Office service plans, which enable our business customers to access
additional features of Virtual Office through on-screen menus on the phone.