Seagate 2007 Annual Report Download - page 24

Table of Contents
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changes in the demand for the computer systems, storage subsystems and consumer electronics that contain our disc drives, due to
seasonality, economic conditions 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 competing disc drive solutions or alternative storage technology solutions, such as flash memory or SSDs;
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shifting trends in customer demand which, when combined with overproduction of particular products, particularly when the industry
is served by multiple suppliers, results in supply/demand imbalances;
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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 with the goal that we will be able to introduce technologically advanced and lower cost disc
drives into the marketplace ahead of our competitors.
The success of our new product introductions is dependent on a number of factors, including market acceptance, our ability to manage the
risks associated with product transitions, the effective management of inventory levels in line with anticipated product demand, and the risk that
our new products will have quality problems or other defects in the early stages of introduction that were not anticipated in the design of those
products. Accordingly, we cannot accurately determine the ultimate effect that our new products will have on our results of operations.
In addition, the success of our new product introductions is dependent upon our ability to qualify as a primary source of supply with our
OEM customers. In order for our products to be considered by our customers for qualification, we must be among the leaders in time-to-market
with those new products. Once a product is accepted for qualification testing, any failure or delay in the qualification process or a requirement
that we requalify can result in our losing sales to that customer until new products are introduced. The limited number of high-volume OEMs
magnifies the effect of missing a product qualification opportunity. These risks are further magnified because we expect competitive pressures to
result in declining sales and declining gross margins on our current generation products. We cannot assure you that we will be among the leaders
in time-to-market with new products or that we will be able to successfully qualify new products with our customers in the future. If we cannot
successfully deliver competitive products, then our future results of operations may be adversely affected.
Smaller Form Factor Disc Drives—If we do not continue to successfully market smaller form factor disc drives, our business may
suffer.
The disc drive industry is experiencing significant increases in sales of smaller form factor disc drives for an expanding number of
applications, in particular notebook computers and consumer electronics devices, but also including personal computers and enterprise storage
applications. Much of our recent revenue growth is derived from the sale of small form factor drives for notebook and enterprise applications.
Our continued success will depend on our ability to develop and introduce such small form factor drives at desired price and capacity points
faster than our competitors.
We have experienced competition from other companies that produce alternative storage technologies like solid state or flash memory,
where increased capacity, improving cost, lower power consumption and
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