iRobot 2010 Annual Report Download - page 59

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ITEM 1A. RISK FACTORS
We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our
control. This discussion highlights some of the risks which may affect future operating results. These are the risks
and uncertainties we believe are most important for you to consider. Additional risks and uncertainties not presently
known to us, which we currently deem immaterial or which are similar to those faced by other companies in our
industry or business in general, may also impair our business operations. If any of the following risks or
uncertainties actually occurs, our business, financial condition and operating results would likely suffer.
Risks Related to Our Business
We operate in an emerging market, which makes it difficult to evaluate our business and future
prospects.
Robots represent a new and emerging market. Accordingly, our business and future prospects are difficult to
evaluate. We cannot accurately predict the extent to which demand for consumer robots will increase, if at all.
Moreover, there are only a limited number of major programs under which the U.S. federal government is currently
funding the development or purchase of military robots. You should consider the challenges, risks and uncertainties
frequently encountered by companies using new and unproven business models in rapidly evolving markets. These
challenges include our ability to:
• generate sufficient revenue and gross margin to maintain profitability;
• acquire and maintain market share in our consumer and military markets;
• manage growth in our operations;
• attract and retain customers of our consumer robots;
• develop and renew government contracts for our military robots;
• attract and retain additional engineers and other highly-qualified personnel;
• expand our product offerings beyond our existing robots;
• adapt to new or changing policies and spending priorities of governments and government agencies; and
• access additional capital when required and on reasonable terms.
If we fail to successfully address these and other challenges, risks and uncertainties, our business, results of
operations and financial condition would be materially harmed.
Our financial results often vary significantly from quarter-to-quarter due to a number of factors, which
may lead to volatility in our stock price.
Our quarterly revenue and other operating results have varied in the past and are likely to continue to vary
significantly from quarter-to-quarter. These fluctuations will be due to numerous factors including:
• the size and timing of orders from military and other government agencies;
• the size, timing and mix of orders from retail stores and international distributors for our home care robots;
• the mix of products that we sell in the period;
• disruption of supply of our products from our manufacturers;
• seasonality in the sales of our consumer products, which have historically been heavily weighted in the
second half of the year;
• the inability to attract and retain qualified, revenue-generating personnel;
• unanticipated costs incurred in the introduction of new products;
• costs and availability of labor and raw materials;
13
Form 10-K