SanDisk 2007 Annual Report Download - page 70

regulations, the commencement or results of litigation or changes in earnings estimates by analysts. In addition, in
recent years the stock market has experienced significant price and volume fluctuations and the market prices of the
securities of high technology and semiconductor companies have been especially volatile, often for reasons outside
the control of the particular companies. These fluctuations as well as general economic, political and market
conditions may have an adverse affect on the market price of our common stock as well as the price of our
outstanding convertible notes and could impact the likelihood of those notes being converted into our common
stock, which would cause further dilution to our stockholders.
We may engage in business combinations that are dilutive to existing stockholders, result in unanticipated
accounting charges or otherwise adversely affect our results of operations, and result in difficulties in assimilating
and integrating the operations, personnel, technologies, products and information systems of acquired companies
or businesses. We continually evaluate and explore strategic opportunities as they arise, including business
combinations, strategic partnerships, collaborations, capital investments and the purchase, licensing or sale of
assets. If we issue equity securities in connection with an acquisition, the issuance may be dilutive to our existing
stockholders. Alternatively, acquisitions made entirely or partially for cash would reduce our cash reserves.
Acquisitions may require significant capital infusions, typically entail many risks and could result in
difficulties in assimilating and integrating the operations, personnel, technologies, products and information
systems of acquired companies. We may experience delays in the timing and successful integration of acquired
technologies and product development through volume production, unanticipated costs and expenditures, changing
relationships with customers, suppliers and strategic partners, or contractual, intellectual property or employment
issues. In addition, key personnel of an acquired company may decide not to work for us. The acquisition of another
company or its products and technologies may also result in our entering into a geographic or business market in
which we have little or no prior experience. These challenges could disrupt our ongoing business, distract our
management and employees, harm our reputation, subject us to an increased risk of intellectual property and other
litigation and increase our expenses. These challenges are magnified as the size of the acquisition increases, and we
cannot assure you that we will realize the intended benefits of any acquisition. Acquisitions may require large one-
time charges and can result in increased debt or contingent liabilities, adverse tax consequences, substantial
depreciation or deferred compensation charges, the amortization of identifiable purchased intangible assets or
impairment of goodwill, any of which could have a material adverse effect on our business, financial condition or
results of operations.
Mergers and acquisitions of high-technology companies are inherently risky and subject to many factors
outside of our control, and no assurance can be given that our previous or future acquisitions will be successful and
will not materially adversely affect our business, operating results, or financial condition. Failure to manage and
successfully integrate acquisitions could materially harm our business and operating results. Even when an acquired
company has already developed and marketed products, there can be no assurance that such products will be
successful after the closing, will not cannibalize sales of our existing products, that product enhancements will be
made in a timely fashion or that pre-acquisition due diligence will have identified all possible issues that might arise
with respect to such company. Failed business combinations, or the efforts to create a business combination, can
also result in litigation.
Our success depends on our key personnel, including our executive officers, the loss of whom could disrupt our
business. Our success greatly depends on the continued contributions of our senior management and other key
research and development, sales, marketing and operations personnel, including Dr. Eli Harari, our founder,
chairman and chief executive officer. We do not have employment agreements with any of our executive officers
and they are free to terminate their employment with us at any time. Our success will also depend on our ability to
recruit additional highly skilled personnel. We may not be successful in hiring or retaining key personnel.
Terrorist attacks, war, threats of war and government responses thereto may negatively impact our operations,
revenues, costs and stock price. Terrorist attacks, U.S. military responses to these attacks, war, threats of war and
any corresponding decline in consumer confidence could have a negative impact on consumer retail demand, which
is the largest channel for our products. Any of these events may disrupt our operations or those of our customers and
suppliers and may affect the availability of materials needed to manufacture our products or the means to transport
those materials to manufacturing facilities and finished products to customers. Any of these events could also
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