Seagate 2015 Annual Report Download - page 21
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ITEM1A.RISKFACTORS
Ifwefailtopredictdemandaccuratelyforourproductsinanyquarter,wemaynotbeabletorecapturethecostofourinvestments.
Ourindustryoperatesprimarilyonquarterlypurchasingcycles,withmuchoftheorderflowinanygivenquartertypicallycomingattheendofthatquarter.
Ourmanufacturingprocessrequiresustomakesignificantproduct-specificinvestmentsininventoryineachquarterforthatquarter'sproduction.Sincewe
typicallyreceivethebulkofourorderslateinaquarterafterwehavemadeourinvestments,thereisariskthatourorderswillnotbesufficienttoallowusto
recapturethecostsofourinvestmentbeforetheproductsresultingfromthatinvestmenthavebecomeobsolete.Wecannotassureyouthatwewillbeableto
accuratelypredictdemandinthefuture.
Ourrevenuesinanyquarteraresubstantiallydependentuponcustomerordersinthatquarter.Weattempttoprojectfutureordersbasedinpartonestimates
fromourmajorcustomers.Ourcustomers'estimatedrequirementsarenotalwaysaccurateandwethereforecannotpredictourquarterlyrevenueswithanydegree
ofcertainty.Inaddition,wederiveaportionofourrevenuesineachquarterfromanumberofrelativelylargeorders.Ifoneormoreofourmajorcustomersdecide
todeferapurchaseorderordelaysproductacceptanceinanygivenquarter,thisislikelytoresultinreducedtotalrevenuesforthatquarter.
Thedifficultyinforecastingdemandalsoincreasesthedifficultyinanticipatingourinventoryrequirements,whichmaycauseustoover-producefinished
goods,resultingininventorywrite-offs,orunder-producefinishedgoods,adverselyaffectingourabilitytomeetcustomerrequirementsandourmarketshare.
Additionally,theriskofinventorywrite-offscouldincreaseifweweretocontinuetoholdhigherinventorylevels.Wecannotbecertainthatwewillbeableto
recoverthecostsassociatedwithincreasedinventory.
Otherfactorsthatmaynegativelyimpactourabilitytorecapturethecostofinvestmentsinanygivenquarterinclude:
•theimpactofvariabledemandandanaggressivepricingenvironmentfordiskdrives;
•theimpactofcompetitiveproductannouncementsandpossibleexcessindustrysupplybothwithrespecttoparticulardiskdriveproductsandwith
respecttocompetingalternativestoragetechnologysolutionssuchasSSDsintablet,notebookandenterprisecomputeapplications;
•ourinabilitytoreduceourfixedcoststomatchsalesinanyquarterbecauseofourverticalmanufacturingstrategy,whichmeansthatwemakemore
capitalinvestmentsthanwewouldifwewerenotverticallyintegrated;
•dependenceonourabilitytosuccessfullyqualify,manufactureandsellinincreasingvolumesonacost-effectivebasisandwithacceptablequality
ourdiskdriveproducts,particularlythenewdiskdriveproductswithlowercoststructures;
•uncertaintyintheamountofpurchasesfromourdistributorcustomerswhofromtimetotimeconstitutealargeportionofourtotalsales;
•ourproductmixandtherelatedmarginsofthevariousproducts;
•acceleratedreductioninthepriceofourdiskdrivesduetotechnologicaladvancesand/oranoversupplyofdiskdrivesinthemarketandshifting
trendsindemandwhichcancreatesupplyanddemandimbalances;
•manufacturingdelaysorinterruptions,particularlyatourmanufacturingfacilitiesinChina,Malaysia,NorthernIreland,Singapore,Thailand,the
UnitedKingdom,ortheUnitedStates;
•limitedaccesstocomponentsthatweobtainfromasingleoralimitednumberofsuppliers;
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