Netgear 2010 Annual Report Download - page 27

Table of Contents
We cannot assure you that we will be successful in selecting, executing and integrating acquisitions. Failure to manage and successfully
integrate acquisitions could materially harm our business and operating results. In addition, if stock market analysts or our stockholders do not
support or believe in the value of the acquisitions that we choose to undertake, our stock price may decline.
We invest in companies for strategic reasons and may not realize a return on our investments.
We have made, and continue to seek to make investments in companies around the world to further our strategic objectives and support our
key business initiatives. These investments may include equity or debt instruments of public or private companies, and may be non-
marketable at
the time of our initial investment. We do not restrict the types of companies in which we seek to invest. These companies may range from early-
stage companies that are often still defining their strategic direction to more mature companies with established revenue streams and business
models. If any company in which we invest fails, we could lose all or part of our investment in that company. If we determine that an other-than-
temporary decline in the fair value exists for an equity or debt investment in a public or private company in which we have invested, we will
have to write down the investment to its fair value and recognize the related write-down as an investment loss. The performance of any of these
investments could result in significant impairment charges and gains (losses) on other equity investments. We must also analyze accounting and
legal issues when making these investments. If we do not structure these investments properly, we may be subject to certain adverse accounting
issues, such as potential consolidation of financial results.
Furthermore, if the strategic objectives of an investment have been achieved, or if the investment or business diverges from our strategic
objectives, we may seek to dispose of the investment. Our non-marketable equity investments in private companies are not liquid, and we may
not be able to dispose of these investments on favorable terms or at all. The occurrence of any of these events could harm our results. Gains or
losses from equity securities could vary from expectations depending on gains or losses realized on the sale or exchange of securities and
impairment charges related to debt instruments as well as equity and other investments.
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, finance 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 commercial business, home user, and broadband service provider markets. While we
have adopted an emergency succession plan for the short term, we have not formally adopted a long term succession plan. As a result, if we
suffer the loss of services of any key executive, our long term business results may be harmed. In addition, because we do not have a formal long
term succession plan, we may not be able to have the proper personnel in place to effectively execute our long term business strategy if Patrick
Lo or other key personnel retire, resign or are otherwise terminated.
If our goodwill or amortizable intangible assets become impaired we may be required to record a significant charge to earnings.
Under generally accepted accounting principles, we review our amortizable intangible assets for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that
may be considered when determining if the carrying value of our goodwill or amortizable intangible assets may not be recoverable include a
significant decline in our expected future cash flows or a sustained, significant decline in our stock price and market capitalization.
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