1022225--9/12/2008--OPLINK_COMMUNICATIONS

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Our recent acquisition of OCP may prove unfavorable to us and our stockholders, because we may not realize expected benefits or synergies. We depend on the growth and success of the communications industry, which is subject to severe fluctuations in economic activity. We expect volatility in our stock price, which could cause you to lose all or part of your investment. The optical networking component industry is experiencing declining average selling prices, which could cause our gross margins to decline and harm our operating results. Our ROADM Optical Switching and Routing product has accounted for a significant portion of our revenues for recent periods. We have recently experienced declines in both unit shipments and ASPs of our ROADM products as a result of increased competition, and we expect this trend to continue. If our customers do not approve our manufacturing processes and qualify our products, we will lose significant customer sales and opportunities. 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 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. Because we depend on third parties to supply some of our raw 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. If we are unable develop new products and product enhancements that achieve market acceptance, our revenues could decline, which would harm our operating results. 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. 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. Because none of our customers are obligated to purchase our products, they may cancel or defer their purchases at any time and on short notice, which could harm our operating results. 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. If tax benefits available to our subsidiaries located in China are reduced or repealed or our China subsidiaries fail to meet the requirements for utilizing such tax benefits, our financial condition and operating results could suffer. If we are unable to protect our proprietary technology, our ability to succeed will be harmed. We may be involved in intellectual property disputes in the future, which will divert management s attention and could cause us to incur significant costs and prevent us from selling or using the challenged technology. 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. A new labor contract law has been enacted in China. Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could impair the reliability of our financial statements, cause us to delay filing our periodic reports with the SEC, harm our reputation and adversely affect our stock price. 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.

Full 10-K form ▸

1022225--9/12/2008--OPLINK_COMMUNICATIONS_INC