Plantronics 2007 Annual Report Download - page 25

part i
21A R 2 0 0 7
• Most of our suppliers are not obligated to continue to provide us with raw materials, components
and sub-assemblies. Rather, we buy most raw materials, components and subassemblies on a
purchase order basis. If our suppliers experience increased demand or shortages, it could affect
deliveries to us. In turn, this would affect our ability to manufacture and sell products that are
dependent on those raw materials, components and subassemblies. Any such shortages would
materially adversely affect our business, financial condition and results of operations; and
• Although we generally use standard raw materials, parts and components for our products,
the high development costs associated with emerging wireless technologies permits us to work
with only a single source of silicon chip-sets on any particular new product. We, or our chosen
supplier of chip-sets, may experience challenges in designing, developing and manufacturing
components in these new technologies which could affect our ability to meet market schedules.
Due to our dependence on single suppliers for certain chip sets, we could experience higher
prices, a delay in development of the chip-set, and/or the inability to meet our customer demand
for these new products. Our business, operating results and financial condition could therefore
be materially adversely affected as a result of these factors.
We depend on original design manufacturers and contract manufacturers who may not have adequate
capacity to fulfill our needs or may not meet our quality and delivery objectives.
Original design manufacturers and contract manufacturers produce key portions of our product lines for
us. Our reliance on them involves significant risks, including reduced control over quality and logistics
management, the potential lack of adequate capacity and loss of services. Financial instability of our
manufacturers or contractors could result in our having to find new suppliers, which could increase our
costs and delay our product deliveries. These manufacturers and contractors may also choose to discontinue
building our products for a variety of reasons.
Consequently, we may experience delays in the timeliness, quality and adequacy of product deliveries, any
of which could harm our business and operating results.
Demand for iPod products, which are produced by Apple, Inc., affects demand for certain Docking Audio
products.
Certain of our Docking Audio products under our Altec Lansing brand were developed for use with
Apple, Inc.’s (“Apple”) iPod products. We have a non-exclusive right to use the Apple interface with
certain of our Docking Audio products, and we are required to pay Apple a royalty for this right. The
risks faced in conjunction with our Apple related products include, among others:
• If supply or demand for iPod products decreases, demand for certain of our Docking Audio
products could be negatively affected. MP3 integration with cell phones could take significant
market share from Apple’s iPod products;
• If Apple does not renew or cancels our licensing agreement, our products may not be compatible
with iPods, resulting in loss of revenues and excess inventories which would negatively impact
our financial results;
• If Apple changes its iPod product design more frequently than we update certain of our
Docking Audio products, certain of our products may not be compatible with the changed
design. Moreover, if Apple makes style changes to its products more frequently than we update
certain of our Docking Audio products, consumers may not like the look of our products with
the iPod. Both of these factors could result in decreased demand for our products and excess
inventories could result which would negatively impact our financial results; and
• Apple has introduced its own line of iPod speaker products, which compete with certain of our
Altec Lansing-branded speaker products. As the manufacturer of the iPod, Apple has unique
advantages with regard to product changes or introductions that we do not possess, which could
negatively impact our ability to compete effectively against Apple’s speaker products. Moreover,