Adaptec 2007 Annual Report Download - page 26

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Table of Contents
We are exposed to the credit risk of some of our customers.
Many of our customers employ contract manufacturers to produce their products and manage their inventories. Many of these contract manufacturers
represent greater credit risk than our OEM customers, who do not guarantee our credit receivables related to their contract manufacturers.
In addition, a significant portion of our sales flows through our distribution channel, which generally represents a higher credit risk. Should these
companies encounter financial difficulties, our revenues could decrease, and collection of our significant accounts receivables with these companies could be
jeopardized.
Our business strategy contemplates acquisition of other products, technologies, or businesses, which could adversely affect our operating performance.
Acquiring products, intellectual property, technologies, or businesses from third parties is a core part of our business strategy. That strategy depends on the
availability of suitable acquisition candidates at reasonable prices and our ability to resolve challenges associated with integrating acquired businesses into our
existing business. These challenges include integration of product lines, sales forces, customer lists and manufacturing facilities, development of expertise
outside our existing business, diversion of management time and resources, possible divestitures, inventory write-offs and other charges. We also may be forced
to replace key personnel who may leave our Company as a result of an acquisition. We cannot be certain that we will find suitable acquisition candidates or that
we will be able to meet these challenges successfully.
An acquisition could absorb substantial cash resources, require us to incur or assume debt obligations, or issue additional equity. If we are not able to
obtain financing, then we may not be in a position to consummate acquisitions. If we issue equity securities in connection with an acquisition, we may dilute our
common stock with securities that have an equal or a senior interest in our Company.
From time to time, we license, or acquire, technology from third parties to incorporate into our products. Incorporating technology into our products
may be more costly or more difficult than expected, or require additional management attention to achieve the desired functionality. The complexity of
our products could result in unforeseen or undetected defects or bugs, which could adversely affect the market acceptance of new products and damage
our reputation with current or prospective customers.
Our current product road map will, in part, be dependent on successful acquisition and integration of intellectual property cores developed by third parties.
If we experience difficulties in obtaining or integrating intellectual property from these third parties, it could delay or prevent the development of our products in
the future.
Although our customers, our suppliers, and we rigorously test our products, our highly complex products may contain defects or bugs. We have in the past
experienced, and may in
20
Source: PMC SIERRA INC, 10-K, February 22, 2008