Seagate 2003 Annual Report Download - page 41

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Table of Contents
substantial resources than we do. In addition, Hitachi Global Storage Technologies (together with affiliated entities) and Samsung Electronics
Incorporated also sell other products to our customers, including critical components like flash memory, application-
specific integrated circuits,
or ASICs, and flat panel displays, and may be willing to sell their disc drives at a lower margin to advance their overall business strategy. This
may improve their ability to compete with us. To the extent we are not successful competing with captive or independent rigid disc drive
manufacturers, our results of operations will be adversely affected.
In addition, in response to customer demand for high-quality, high-volume and low-cost rigid disc drives, manufacturers of rigid disc
drives have had to develop large, in some cases global, production facilities with highly developed technological capabilities and internal
controls. The development of large production facilities and industry consolidation can contribute to the intensification of competition. We also
face indirect competition from present and potential customers who evaluate from time to time whether to manufacture their own rigid disc
drives or other information storage products.
Volatility of Quarterly Results—Our quarterly operating results fluctuate significantly from period to period, and this may cause our
stock price to decline.
In the past, our quarterly revenue and operating results fluctuated significantly from period to period. We expect this fluctuation to
continue for a variety of reasons, including:
•
changes in the demand for the computer systems, storage subsystems and consumer electronics that contain our rigid disc drives, due
to seasonality and other factors;
•
changes in purchases from period to period by our primary customers, particularly as our competitors are able to introduce and
produce in volume comparable product technology;
•
competitive pressures resulting in lower selling prices;
•
delays or problems in the introduction of our new products due to inability to achieve high production yields, delays in customer
qualification or initial product quality issues;
•
shifting trends in customer demand which, when combined with overproduction of particular products, particularly at times like now
where the industry is served by multiple suppliers, results in supply/demand imbalances;
•
the impact of restructuring activities that the company may engage in;
•
adverse changes in the level of economic activity in the United States and other major regions in which we do business;
•
our high proportion of fixed costs, including research and development expenses;
•
announcements of new products, services or technological innovations by us or our competitors; and
As a result, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful, and that these
comparisons may not be an accurate indicator of our future performance. Our operating results in one or more future quarters may fail to meet
the expectations of investment research analysts or investors, which could cause an immediate and significant decline in the trading price of our
common shares.
New Product Offerings—Market acceptance of new product introductions cannot be accurately predicted, and our results of
operations will suffer if there is less demand for our new products than is anticipated.
•
increased costs or adverse changes in availability of supplies.
We are continually developing new products in the hope that we will be able to introduce technologically advanced rigid disc drives into
the marketplace ahead of our competitors.
40