Seagate 2011 Annual Report Download - page 30

Table of Contents
Impairment Charges
—We may be required to record additional impairment charges for goodwill and/or other long-lived assets.
We are required to assess goodwill annually for impairment, or on an interim basis whenever events occur or circumstances change, such as
an adverse change in business climate or a decline in the overall industry, that would more likely than not reduce the fair value of a reporting unit
below its carrying amount. We are also required to test other long-lived assets, including acquired intangible assets and property, equipment and
leasehold improvements, for recoverability and impairment whenever there are indicators of impairment, such as an adverse change in business
climate.
Adverse changes in business conditions could materially impact our estimates of future operations and result in impairment charges to our
goodwill or other long lived assets. If our goodwill or other long-lived assets were to become impaired, our results of operations could be
materially and adversely affected.
Impact of Technological Change
—Increases in the areal density of disk drives may outpace customers' demand for storage capacity.
The rate of increase in areal density, or storage capacity per square inch on a disk, may be greater than the increase in our customers'
demand for aggregate storage capacity, particularly in certain market applications like client compute. As a result, our customers' storage
capacity needs may be satisfied with lower priced, low capacity disk drives. These factors could decrease our sales, especially when combined
with continued price erosion, which could adversely affect our results of operations.
Changes in Electronic Data Storage Products—Future changes in the nature of electronic data storage products may reduce demand for
traditional disk drive products.
We expect that in the future, new personal computing devices and products will be developed, some of which, such as Internet appliances,
tablet or mobile phones with advanced capabilities, or smartphones, may not contain a disk drive. While we are investing development resources
in designing disk drives for these new applications, these new applications may have an impact on future demand for disk drive products.
Products using alternative technologies, such as flash memory and other storage technologies, are becoming increasingly common and could
become a significant source of competition to particular applications of our products, which could adversely affect our results of operations.
New Product Development and Technological Change
—If we do not develop products in time to keep pace with technological changes, our
results of operations will be adversely affected.
Our customers have demanded new generations of disk drive products as advances in computer hardware and software have created the
need for improved storage products, with features such as increased storage capacity, improved performance and reliability and lower cost. We,
and our competitors, have developed improved products, and we will need to continue to do so in the future. Such product development requires
significant investments in research and development. We cannot assure you that we will be able to successfully complete the design or
introduction of new products in a timely manner, that we will be able to manufacture new products in sufficient volumes with acceptable
manufacturing yields, that we will be able to successfully market these new products or that these products will perform to specifications on a
long-term basis. In addition, the impact of slowing areal density growth may adversely impact our ability to be successful.
When we develop new products with higher capacity and more advanced technology, our results of operations may decline because the
increased difficulty and complexity associated with producing these products increases the likelihood of reliability, quality or operability
problems. If our products suffer increases in failures, are of low quality or are not reliable, customers may reduce their purchases of our products
and our manufacturing rework and scrap costs and service and warranty costs may increase. In
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