Seagate 2004 Annual Report Download - page 44

Table of Contents
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 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 disc drives, manufacturers of 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 disc drives or other
information storage products.
We have also started to experience competition from other companies that produce alternative storage technologies like flash memory,
where increased capacity and lower cost of these technologies have resulted in competition with our lower capacity, smaller form factor disc
drives.
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 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 or alternative storage technology solutions, such as flash memory;
• competitive pressures resulting in lower selling prices;
• increased costs or adverse changes in availability of supplies;
• 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 corporate restructuring activities that we 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; 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.
• announcements of new products, services or technological innovations by us or our competitors.
We are continually developing new products in the hope that we will be able to introduce technologically advanced disc drives into the
marketplace ahead of our competitors.
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