1009626--12/21/2007--BROCADE_COMMUNICATIONS_SYSTEMS

related topics

{product, market, service}

{regulation, change, law}

{customer, product, revenue}

{acquisition, growth, future}

{stock, price, operating}

{property, intellectual, protect}

{system, service, information}

{personnel, key, retain}

{condition, economic, financial}

Brocade is currently expanding its product and service offerings in new and adjacent markets and Brocade s operating results will suffer if these initiatives are not successful. Increased market competition may lead to reduced sales, margins, profits and market share. Brocade s revenues will be affected by changes in domestic and international information technology spending and overall demand for data center solutions. Brocade depends on OEM partners for a majority of Brocade s revenues and the loss of any of these OEM partners or a decrease in their purchases could significantly reduce Brocade s revenues and negatively affect Brocade s financial results. Brocade s failure to successfully manage the transition between its new products and its older products may adversely affect Brocade s financial results. Failure to manage expansion effectively could seriously harm our business, financial condition and prospects. The failure to accurately forecast demand for Brocade s products or the failure to successfully manage the production of Brocade s products could negatively affect the supply of key components for Brocade s products and Brocade s ability to manufacture and sell Brocade s products. The prices of Brocade s products have declined in the past and Brocade expects the price of Brocade s products to continue to decline, which could reduce Brocade s revenues, gross margins and profitability. Brocade is dependent on sole source and limited source suppliers for certain key components, the loss of which may significantly impact results of operations. Certain former employees of Brocade are subject to ongoing actions by the SEC, the Department of Justice, or DOJ, and others, which have required, and may continue to require, a significant amount of legal expense pursuant to indemnification obligations of Brocade, which could adversely affect Brocade s results of operations and cash flows. Brocade may not realize the anticipated benefits of past or future acquisitions and strategic investments and integration of acquired companies or technologies may negatively impact Brocade s business. Brocade s business is subject to cyclical fluctuations and uneven sales patterns, which makes predicting results of operations difficult. Brocade s quarterly and annual revenues and operating results may fluctuate in future periods due to a number of factors, which could adversely affect the trading price of Brocade s stock. Undetected software or hardware errors could increase Brocade s costs, reduce Brocade s revenues and delay market acceptance of Brocade s products. If Brocade loses key personnel or is unable to hire additional qualified personnel, Brocade s business may be harmed. Brocade is subject to environmental regulations that could have a material adverse effect on Brocade s business. Brocade s future operating expenses may be adversely affected by changes in Brocade s stock price. Brocade has extensive international operations, which subjects it to additional business risks. Brocade relies on licenses from third parties and the loss or inability to obtain any such license could harm Brocade s business. Third-parties may bring infringement claims against Brocade, which could be time-consuming and expensive to defend. Business interruptions could adversely affect Brocade s business. Brocade s business is subject to increasingly complex corporate governance, public disclosure, accounting and tax requirements that have increased both its costs and the risk of noncompliance.

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1009626--12/21/2007--BROCADE_COMMUNICATIONS_SYSTEMS_INC