Netgear 2004 Annual Report Download - page 48

Table of Contents
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increased difficulty in managing inventory;
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delayed revenue recognition;
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less effective protection of intellectual property;and
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difficulties and costs of staffing and managing foreign operations.
We currently do not engage in any currency hedging transactions. Although the majority of our international sales are currently
invoiced in United States dollars, we have implemented and continue to implement for certain countries both invoicing and payment in
local foreign currencies, and therefore our exposure to losses in foreign currency transactions will increase. Moreover, the costs of
doing business abroad may increase as a result of adverse exchange rate fluctuations. For example, if the United States dollar declined
in value relative to a local currency, we could be required to pay more for our expenditures in that market, including salaries,
commissions, local operations and marketing expenses, each of which is paid in local currency. In addition, we may lose customers if
exchange rate fluctuations, currency devaluations or economic crises increase the local currency price of our products or reduce our
customers’ ability to purchase products.
We intend to expand our operations and infrastructure, which may strain our operations and increase our operating expenses.
We intend to expand our operations and pursue market opportunities domestically and internationally to grow our sales. We expect
that this attempted expansion will strain our existing management information systems, and operational and financial controls. In
addition, if we continue to grow, our expenditures will likely be significantly higher than our historical costs. We may not be able to
install adequate controls in an efficient and timely manner as our business grows, and our current systems may not be adequate to
support our future operations. The difficulties associated with installing and implementing these new systems, procedures and
controls may place a significant burden on our management, operational and financial resources. In addition, if we grow internationally,
we will have to expand and enhance our communications infrastructure. If we fail to continue to improve our management information
systems, procedures and financial controls or encounter unexpected difficulties during expansion, our business could be harmed.
We intend to implement an international reorganization, which may strain our resources and increase our operating expenses.
We plan to reorganize our foreign subsidiaries and entities to manage and optimize our international operations. Our implementation of
this project will require substantial efforts by our staff and could result in increased staffing requirements and related expenses. Failure
to successfully execute the reorganization or other factors outside of our control could negatively impact the timing and extent of any
benefit we receive from the reorganization. The restructuring will also require us to amend a number of our customer and supplier
agreements, which will require the consent of our third-party customers and suppliers. In addition, there could be unanticipated
interruptions in our business operations as a result of implementing these changes that could result in loss or delay in revenue causing
an adverse effect on our financial results.
Our stock price may be volatile and your investment in our common stock could suffer a decline in value.
With the current uncertainty about economic conditions in the United States, there has been significant volatility in the market price
and trading volume of securities of technology and other companies, which may be unrelated to the financial performance of these
companies. These broad market fluctuations may negatively affect the market price of our common stock.
Some specific factors that may have a significant effect on our common stock market price include:
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actual or anticipated fluctuations in our operating results or our competitors’ operating results;
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actual or anticipated changes in our growth rates or our competitors’ growth rates;
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conditions in the financial markets in general or changes in general economic conditions;
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2005. EDGAR Online, Inc.