Plantronics 2007 Annual Report Download - page 33

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part i
29A R 2 0 0 7
experienced due in part to a number of factors such as, a stronger more competitive labor environment,
our weaker stock price, reduced bonuses and reduced profit sharing. 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 contact centers and
in capital investments to expand or upgrade existing centers, which could negatively affect our business.
Because of our reliance on the contact center market, we will be affected more by changes in the rate of
contact center establishment and expansion and the communications products used by contact center
agents than would a company serving a broader market. Any decrease in the demand for contact centers
and related headset products could cause a decrease in the demand for our products, which would
materially adversely affect our business, financial condition and results of operations.
While we believe we currently have adequate internal control over financial reporting, we are required
to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of
2002 and any adverse results from such evaluation could result in a loss of investor confidence in our
financial reports and have an adverse effect on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404), beginning with our Annual
Report on Form 10-K for the fiscal year ended March 31, 2005, our management is required to report on,
and our independent registered public accounting firm to attest to, the effectiveness of our internal control
over for financial reporting. We have an ongoing program to perform the system and process evaluation
and testing necessary to comply with these requirements.
We have and will continue to incur significant expenses and management resources for Section 404
compliance on an ongoing basis. In the event that our chief executive officer, chief financial officer or
independent registered public accounting firm determine in the future that our internal control over
financial reporting is not effective as defined under Section 404, investor perceptions may be adversely
affected and could cause a decline in the market price of our stock.
Provisions in our charter documents and Delaware law and our adoption of a stockholder rights plan
may delay or prevent a third party from acquiring us, which could decrease the value of our stock.
Our board of directors has the authority to issue preferred stock and to determine the price, rights,
preferences, privileges and restrictions, including voting and conversion rights, of those shares without
any further vote or action by the stockholders. The issuance of our preferred stock could have the effect of
making it more difficult for a third party to acquire us. In addition, we are subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law, which could also have the effect of
delaying or preventing our acquisition by a third party. Further, certain provisions of our Certificate of
Incorporation and bylaws could delay or make more difficult a merger, tender offer or proxy contest,
which could adversely affect the market price of our common stock.