Netgear 2006 Annual Report Download - page 23

Table of Contents
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 are continuing to implement our international reorganization, which is straining our resources and
increasing our operating expenses.
We have been reorganizing our foreign subsidiaries and entities to better manage and optimize our international
operations. Our implementation of this project requires substantial efforts by our staff and is resulting 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. As
part of the reorganization, we have been implementing new information technology systems, including new
forecasting and order processing systems. If we fail to successfully and timely integrate these new systems, we will
suffer disruptions to our operations. Any unanticipated interruptions in our business operations as a result of
implementing these changes 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 continuing 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:
Natural disasters, mischievous actions or terrorist attacks could delay our ability to receive or ship our products,
or otherwise disrupt our business.
Our corporate headquarters are located in Northern California and one of our warehouses is located in Southern
California, regions known for seismic activity. In addition, substantially all of our manufacturing occurs in two
geographically concentrated areas in mainland China, where disruptions from natural disasters, health epidemics and
political, social and economic instability may affect the region. If our manufacturers or warehousing facilities are
disrupted or destroyed, we would be unable to distribute our products on a timely basis, which could
19
•
actual or anticipated fluctuations in our operating results or our competitors
’
operating results;
• actual or anticipated changes in the growth rate of the general networking sector, our growth rates or our
competitors
’
growth rates;
•
conditions in the financial markets in general or changes in general economic conditions;
•
interest rate or currency exchange rate fluctuations;
•
our ability to raise additional capital; and
• changes in stock market analyst recommendations regarding our common stock, other comparable companies
or our industry generally.