Seagate 2007 Annual Report Download - page 31

Table of Contents
If we are successful in forming strategic alliances or acquiring, forming joint ventures or making investments in other companies, any of
these transactions may have an adverse effect on our operating results, particularly while the operations of an acquired business are being
integrated. It is also likely that integration of acquired companies would lead to the loss of key employees from those companies or the loss of
customers of those companies. In addition, the integration of any acquired companies would require substantial attention from our senior
management, which may limit the amount of time available to be devoted to our day-to-day operations or to the execution of our strategy.
Growth by strategic alliance, acquisition, joint venture or investment involves an even higher degree of risk to the extent we combine new
product offerings and enter new markets in which we have limited experience, and no assurance can be given that acquisitions of entities with
new or alternative business models will be successfully integrated or achieve their stated objectives.
Furthermore, the expansion of our business involves the risk that we might not manage our growth effectively, that we would incur
additional debt to finance these acquisitions or investments, that we may have impairment of goodwill or acquired intangible assets associated
with these acquisitions and that we would incur substantial charges relating to the write-off of in-process research and development, similar to
that which we incurred in connection with several of our prior acquisitions. Each of these items could have a material adverse effect on our
financial position and results of operations.
In addition, we could issue additional common shares in connection with future strategic alliances, acquisitions, joint ventures or
investments. Issuing shares in connection with such transactions would have the effect of diluting your ownership percentage of the common
shares and could cause the price of our common shares to decline.
Risk of Intellectual Property Litigation—Our products may infringe the intellectual property rights of others, which may cause us to
incur unexpected costs or prevent us from selling our products.
We cannot be certain that our products do not and will not infringe issued patents or other intellectual property rights of others.
Historically, patent applications in the United States and some foreign countries have not been publicly disclosed until the patent is issued, and
we may not be aware of currently filed patent applications that relate to our products or technology. If patents are later issued on these
applications, we may be liable for infringement. We may be subject to legal proceedings and claims, including claims of alleged infringement of
the patents, trademarks and other intellectual property rights of third parties by us or our customers in connection with their use of our products.
We are currently subject to lawsuits involving intellectual property claims which could cause us to incur significant additional costs or
prevent us from selling our products, and which could adversely effect our results of operations and financial condition: actions brought in
the United States by Convolve, Inc., and the Massachusetts Institute of Technology, Siemens AG, and StorMedia Texas LLC.
Intellectual property litigation is expensive and time
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consuming, regardless of the merits of any claim, and could divert our management
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attention from operating our business. In addition, intellectual property lawsuits are subject to inherent uncertainties due to the complexity of the
technical issues involved, and we cannot assure you that we will be successful in defending ourselves against intellectual property claims.
Moreover, patent litigation has increased due to the current uncertainty of the law and the increasing competition and overlap of product
functionality in the field. If we were to discover that our products infringe the intellectual property rights of others, we would need to obtain
licenses from these parties or substantially reengineer our products in order to avoid infringement. We might not be able to obtain the necessary
licenses on acceptable terms, or at all, or be able to reengineer our products successfully. Moreover, if we are sued for patent infringement and
lose the suit, we could be required to pay substantial damages and/or be enjoined from using or selling the infringing products or technology.
Any of the foregoing could cause us to incur significant costs and prevent us from selling our products which could adversely affect our results
of operations and financial condition. See See Part II, “Item 8, Note 9, Legal, Environmental, and Other Contingencies – Intellectual Property
Litigation” for a description of pending intellectual property proceedings.
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