Western Digital 2001 Annual Report Download - page 38

The market price of our common stock is volatile.
The market price of our common stock has been, and may continue to be, extremely volatile. Factors
such as the following may signiÑcantly aÅect the market price of our common stock:
‚ actual or anticipated Öuctuations in our operating results
‚ announcements of technological innovations by us or our competitors which may decrease the volume
and proÑtability of sales of our existing products and increase the risk of inventory obsolescence
‚ new products introduced by us or our competitors
‚ periods of severe pricing pressures due to oversupply or price erosion resulting from competitive
pressures
‚ developments with respect to patents or proprietary rights
‚ conditions and trends in the hard drive, data and content management, storage and communication
industries
‚ changes in Ñnancial estimates by securities analysts relating speciÑcally to us or the hard drive industry
in general.
In addition, the stock market in recent months has experienced extreme price and volume Öuctuations
that have particularly aÅected the stock price of many high technology companies. These Öuctuations are
often unrelated to the operating performance of the companies.
Securities class action lawsuits are often brought against companies after periods of volatility in the
market price of their securities. A number of such suits have been Ñled against us in the past, and any of these
litigation matters could result in substantial costs and a diversion of resources and management's attention.
We may be unable to raise future capital through debt or equity Ñnancing.
Due to our recent Ñnancial performance and the risks described in this Report, in the future we may be
unable to maintain adequate Ñnancial resources for capital expenditures, working capital and research and
development. We have a credit facility for our WDT subsidiary, which matures on September 20, 2003. If we
decide to increase or accelerate our capital expenditures or research and development eÅorts, or if results of
operations do not meet our expectations, we could require additional debt or equity Ñnancing. However, we
cannot ensure that additional Ñnancing will be available to us or available on favorable terms. An equity
Ñnancing could also be dilutive to our existing stockholders.
Power outages resulting from energy shortages in California may have an adverse impact on our facilities
located in California.
We conduct substantial operations at our headquarters located in Lake Forest, California and at our
facilities located in San Jose, California and Irvine, California. We rely on a continuous power supply in order
to conduct those operations. California's current energy crisis could disrupt our operations and increase our
expenses. In the event of an acute power shortage, that is, when energy reserves for the state fall below 1.5%,
California has on some occasions implemented, and may in the future implement, rolling blackouts across the
state. Although the Governor and state legislators are working to prevent them in the future, and although the
Company has back-up energy reserves to last a short period, rolling blackouts could interrupt our power supply
and might temporarily render us unable to continue operations at our California facilities. Any such
interruption in our ability to continue our operations at our California facilities could delay the development of
products or disrupt communications with our customers, suppliers or manufacturing operations, either of
which could harm our business and results of operations. In addition, if wholesale prices for electricity
continue to increase, our operating expenses would likely increase which might negatively aÅect our operating
results.
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