1022225--9/10/2010--OPLINK_COMMUNICATIONS

related topics

{customer, product, revenue}

{product, market, service}

{cost, operation, labor}

{property, intellectual, protect}

{operation, international, foreign}

{tax, income, asset}

{system, service, information}

{product, candidate, development}

{regulation, change, law}

{cost, regulation, environmental}

{personnel, key, retain}

{provision, law, control}

{condition, economic, financial}

{acquisition, growth, future}

{stock, price, operating}

We expect volatility in our stock price, which could cause you to lose all or part of your investment. We are subject to the cyclical nature of the telecommunications equipment market and any future downturn may reduce demand for our products and revenue. Because we depend on third parties to supply some of our materials and components, we may not be able to obtain sufficient quantities of these materials, which could limit our ability to fill customer orders and harm our operating results. Shifts in our product mix may result in declines in gross margins. Resources devoted to research and development may not yield new products that achieve commercial success. We depend upon a small number of customers for a substantial portion of our revenues, and any decrease in revenues from, or loss of, these customers without a corresponding increase in revenues from other customers would harm our operating results. Our cost advantage from having our manufacturing and most of our R D in China may diminish over time due to increasing labor costs. We may be involved in intellectual property disputes in the future, which could divert management s attention, cause us to incur significant costs and prevent us from selling or using the challenged technology. We are under continuous pressure to reduce the prices of our products. Our products may have defects that are not detected until full deployment of a customer s equipment, which could result in a loss of customers, damage to our reputation and substantial costs. We have incurred substantial losses in the past, and if we are unable to continue to increase our revenues while controlling our costs and operating expenses, we may be unable to sustain our profitability. If we do not successfully increase our manufacturing capacity, we may face capacity constraints that could harm our business. Our sales are mostly made pursuant to short-lead-time purchase orders, and therefore our revenue and financial results are difficult to predict. If we are unable to develop new products and product enhancements that achieve market acceptance, our revenues could decline, which would harm our operating results. Our ROADM Optical Switching and Routing product accounts for a significant portion of our revenues. Our markets are highly competitive, some of our customers are also our competitors, and our other customers may choose to purchase our competitors products rather than our products or develop internal capabilities to produce their own fiber optic modules. If our customers do not approve our manufacturing processes and qualify our products, we will lose significant customer sales and opportunities. If we are unable to successfully integrate acquired businesses or technologies, our operating results may be harmed. If we fail to effectively manage our manufacturing capability, produce products that meet our customers quality requirements and achieve acceptable production yields in China, we may not be able to deliver sufficient quantities of products that meet all of our customers order requirements in a timely manner, which would harm our operating results. If we fail to predict our manufacturing requirements accurately, we could incur additional carrying costs and have excess and obsolete inventory or we could experience manufacturing delays, which could cause us to lose orders or customers. We depend on key personnel to manage our business effectively in a rapidly changing market, and if we are unable to retain our key employees and hire additional personnel, our ability to sell our products could be harmed. We are exposed to currency rate fluctuations and exchange controls that could adversely impact our operating results. If our liability for U.S. and foreign taxes is greater than we have anticipated and reserved for, our operating results may suffer. The tax benefits available to our subsidiaries located in China are currently being phased out, which will result in higher taxes required to be paid by our Chinese subsidiaries than were required in the past. If we are unable to protect our proprietary technology, our ability to succeed will be harmed. Our failure to comply with governmental regulations could subject us to liability. New laws could be enacted that increase the risks and costs to Oplink. Changes in existing financial accounting standards or practices may adversely affect our results of operations. Disruption to commercial activities in the United States or in other countries, particularly in China and Taiwan, may adversely impact our results of operations, our ability to raise capital or our future growth. Provisions of our charter documents and Delaware law and other arrangements may have anti-takeover effects that could prevent any change in control, which could negatively affect your investment.

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1022225--9/10/2010--OPLINK_COMMUNICATIONS_INC