Plantronics 2006 Annual Report Download - page 40

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Our mobile headsets are used with mobile telephones. There has been continuing public controversy over
whether the radio frequency emissions from mobile telephones are harmful to users of mobile phones. We
believe that there is no conclusive proof of any health hazard from the use of mobile telephones but that
research in this area is incomplete. We have tested our headsets through independent laboratories and
have found that use of our corded headsets reduces radio frequency emissions at the user’s head to
virtually zero. Our Bluetooth and other wireless headsets emit significantly less powerful radio frequency
emissions than mobile phones. However, if research establishes a health hazard from the use of mobile
telephones or public controversy grows even in the absence of conclusive research findings, there could be
an adverse impact on the demand for mobile phones, which reduces demand for headset products.
Likewise, should research establish a link between radio frequency emissions and wireless headsets and
public concern in this area grows, demand for our wireless headsets could be reduced creating a material
adverse effect on our financial results.
There is also continuing and increasing public controversy over the use of mobile telephones by operators
of motor vehicles. While we believe that our products enhance driver safety by permitting a motor vehicle
operator to generally be able to keep both hands free to operate the vehicle, there is no certainty that this
is the case and we may be subject to claims arising from allegations that use of a mobile telephone and
headset contributed to a motor vehicle accident. We maintain product liability insurance and general
liability insurance that we believe would cover any such claims. However, the coverage provided under
our policies could be unavailable or insufficient to cover the full amount of any such claim. Therefore,
successful product liability claims brought against us could have a material adverse effect upon our
business, financial condition and results of operations.
Our business could be materially adversely affected if we lose the benefit of the services of key
personnel.
Our success depends to a large extent upon the services of a limited number of executive officers and
other key employees. The unanticipated loss of the services of one or more of our executive officers or key
employees could have a material adverse effect upon our business, financial condition and results of
operations.
We also believe that our future success will depend in large part upon our ability to attract and retain
additional highly skilled technical, management, sales and marketing personnel. Competition for such
personnel is intense. We may not be successful in attracting and retaining such personnel, and our failure
to do so could have a material adverse effect on our business, operating results or financial condition.
The adoption of voice-activated software may cause profits from our contact center products to
decline.
We are seeing a proliferation of speech-activated and voice interactive software in the market place. We
have been re-assessing long-term growth prospects for the contact center market given the growth rate
and the advancement of these new voice recognition-based technologies. Businesses that first embraced
these technologies to resolve labor shortages at the peak of the last economic up cycle are now increasing
spending on these technologies in order to reduce costs. We may experience a decline in our sales to the
contact center market if businesses increase their adoption of speech-activated and voice interactive
software as an alternative to customer service agents. Such adoption could cause a net reduction in
contact center agents, and our revenues in this market could decline.
A significant portion of our profits comes from the contact center market, and a decline in demand in
that market could materially adversely affect our results. While we believe that this market may grow in
future periods, this growth could be slow or revenues from this market could be flat or decline.
Deterioration in general economic conditions could result in a reduction in the establishment of new
34 ⯗Plantronics