SanDisk 2013 Annual Report Download - page 124

those components or materials in a cost-effective manner, or at all. For example, some of our SSDs and the
MCP storage solutions that we supply for use in mobile devices include both NAND flash memory and
DRAM; however, since we do not have a captive supply of DRAM, there could be periods in which we are
unable to cost-effectively source the DRAM that we require or to source DRAM in the quantities or on
the timeline that we require. In addition, costs of DRAM have increased in the past and continued
increases in the future would harm our gross margin for our products that include DRAM. Over the past
year, the non-flash memory content in our cost of sales has increased due to the increased mix of more
complex products in our revenue. If we are unable to source certain components or materials cost
effectively, or at all, or if we are unable to reduce the cost of non-flash memory materials and other costs,
our revenue and margin may be harmed.
We may not be able to realize the potential financial or strategic benefits of business acquisitions or
strategic investments, which could harm our ability to grow our business, develop new products or sell our
products. We have in the past and may in the future enter into acquisitions of, or investments in, businesses
in order to complement or expand our current businesses or enter into new markets. 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, will
deliver the intended benefits, and will not materially harm our business, operating results or financial
condition. Furthermore, negotiation and integration of acquisitions or strategic investments could divert
management’s attention and other company resources.
Factors associated with past or future acquisitions or investments that could harm our growth
prospects or results of operations include but are not limited to:
• difficulty in integrating the technology, products, operations or workforce of the acquired business
into our business;
• difficulty in entering into new markets in which we have limited or no experience, such as software
solutions, and where competitors have stronger positions;
• loss of, or the impairment of or failure to maintain and grow relationships with, key employees,
vendors or customers of the acquired business;
• difficulty in operating in new and potentially disperse locations;
• disruption of our ongoing businesses or the ongoing business of the company we invest in or
acquire;
• failure to realize the potential financial or strategic benefits of the transaction, including but not
limited to any expected cost savings or synergies from the acquisition;
• difficulty integrating the accounting, management information, human resources and other
administrative systems of the acquired business;
• disruption of or delays in ongoing research and development efforts and release of new products to
market;
• diversion of capital and other resources;
• assumption of liabilities;
• issuance of equity securities that may be dilutive to our existing stockholders;
• diversion of resources and unanticipated expenses resulting from litigation arising from potential or
actual business acquisitions or investments;
• failure of the due diligence processes to identify significant issues with product quality, technology
and development, or legal and financial issues, among other things;
26