Netgear 2008 Annual Report Download - page 28

Table of Contents
internationally. A substantial portion of our money market funds are insured by the U.S. Treasury’
s temporary guarantee program, which expires
in April 2009. If these financial institutions default on their obligations or their credit ratings are negatively impacted by liquidity issues, credit
deterioration or losses, financial results, or other factors, the value of our cash equivalents and short-term investments could decline and result in
a material impairment, which could have a material adverse effect on our financial condition and operating results.
Economic conditions, political events, war, terrorism, public health issues, natural disasters and other circumstances could materially
adversely affect us.
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 harm our
business. Moreover, if our computer information systems or communication systems, or those of our vendors or customers, are subject to
disruptive hacker attacks or other disruptions, our business could suffer. We have not established a formal disaster recovery plan. Our back-up
operations may be inadequate and our business interruption insurance may not be enough to compensate us for any losses that may occur. A
significant business interruption could result in losses or damages and harm our business. For example, much of our order fulfillment process is
automated and the order information is stored on our servers. If our computer systems and servers go down even for a short period at the end of a
fiscal quarter, our ability to recognize revenue would be delayed until we were again able to process and ship our orders, which could cause our
stock price to decline significantly.
We depend significantly on worldwide economic conditions and their impact on levels of consumer spending, which have recently
deteriorated significantly in many countries and regions, including without limitation the United States, and may remain depressed for the
foreseeable future. Factors that could influence the levels of consumer spending include increases in fuel and other energy costs, conditions in
the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic
factors affecting consumer spending behavior.
In addition, war, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause
damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on us, our suppliers,
logistics providers, manufacturing vendors and customers. Our business operations are subject to interruption by natural disasters, fire, power
shortages, terrorist attacks, and other hostile acts, labor disputes, public health issues, and other events beyond our control. Such events could
decrease demand for our products, make it difficult or impossible for us to make and deliver products to our customers or to receive components
from our suppliers, and create delays and inefficiencies in our supply chain. Should major public health issues, including pandemics, arise, we
could be negatively affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions
limiting the movement of products between regions, delays in production ramps of new products, and disruptions in the operations of our
manufacturing vendors and component suppliers.
If we lose the services of our Chairman and Chief Executive Officer, Patrick C.S. Lo, or our other key personnel, we may not be able to
execute our business strategy effectively.
Our future success depends in large part upon the continued services of our key technical, sales, marketing and senior management
personnel. In particular, the services of Patrick C.S. Lo, our Chairman and Chief Executive Officer, who has led our company since its inception,
are very important to our business. We do not maintain any key person life insurance policies. The loss of any of our senior management or other
key research, development, sales or marketing personnel, particularly if lost to competitors, could harm our ability to implement our business
strategy and respond to the rapidly changing needs of the small business and home markets.
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