Adaptec 2001 Annual Report Download - page 41

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41
Acquiring products, technologies or businesses from third parties is part of our business
strategy. Management may be diverted from our operations while they identify and negotiate
these acquisitions and integrate an acquired entity into our operations. Also, we may be forced
to develop expertise outside our existing businesses, and replace key personnel who leave due
to an acquisition.
An acquisition could absorb substantial cash resources, require us to incur or assume debt
obligations, or issue additional equity. If we issue more equity, w e may dilute our common
stock with securities that have an equal or a senior interest.
Acquired entities also may have unknow n liabilities, and the combined entity may not achieve
the results that were anticipated at the time of the acquisition.
The timing of revenues from new ly designed products is often uncertain. In the past, we have
had to redesign products that we acquired when buying other businesses, resulting in
increased expenses and delayed revenues. This may occur in the future as we commercialize
the new products resulting from acquisitions.
The complexi ty of our products coul d resul t in unforeseen del ays or expenses and in
undetected def ects or bugs, w hich coul d adversel y aff ect the mark et acceptance of new
products and damage our reputati on with current or prospective customers.
Although we, our customers and our suppliers rigorously test our products, our highly
complex products regularly contain defects or bugs. We have in the past experienced, and may
in the future experience, these defects and bugs. If any of our products contain defects or bugs,
or have reliability, quality or compatibility problems that are significant to our customers, our
reputation may be damaged and customers may be reluctant to buy our products. This could
materially and adversely affect our ability to retain existing customers or attract new customers.
In addition, these defects or bugs could interrupt or delay sales to our customers.
We may have to invest significant capital and other resources to alleviate problems with our
products. If any of these problems are not found until after we have commenced commercial
production of a new product, we may be required to incur additional development costs and
product recall, repair or replacement costs. These problems may also result in claims against us
by our customers or others. In addition, these problems may divert our technical and other
resources from other development efforts. M oreover, we would likely lose, or experience a
delay in, market acceptance of the affected product or products, and we could lose credibility
with our current and prospective customers.
The loss of personnel coul d precl ude us from desi gning new products.
To succeed, w e must retain and hire technical personnel highly skilled at the design and test
functions needed to develop high-speed networking products and related softw are. The
competition for such employees is intense.