1022225--9/15/2006--OPLINK_COMMUNICATIONS

related topics

{customer, product, revenue}

{product, market, service}

{regulation, change, law}

{property, intellectual, protect}

{operation, international, foreign}

{tax, income, asset}

{stock, price, operating}

{system, service, information}

{financial, litigation, operation}

{personnel, key, retain}

{control, financial, internal}

{provision, law, control}

{acquisition, growth, future}

{cost, regulation, environmental}

Our quarterly revenues and operating results are difficult to predict and may continue to fluctuate significantly from quarter to quarter and, therefore, may vary from public market analysts or investors expectations, which could cause our stock price to drop. 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. 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 depend on the growth and success of the communications industry, which is subject to severe fluctuations in economic activity and is also experiencing consolidation and realignment, as well as a trend towards outsourced manufacturing. Because we depend on third parties to supply some of our raw materials and equipment, we may not be able to obtain sufficient quantities of these materials and equipment, or these materials may become unavailable due to technological changes, which could limit our ability to fill customer orders and harm our operating results. We compete in a highly competitive industry, and if we are unable to compete successfully or develop new products and product enhancements that achieve market acceptance, our revenues could decline, which would harm 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 we are unable to successfully integrate acquired businesses or technologies, our operating results may be harmed. Disruption to commercial activities in the United States or in other countries, particularly in China, may adversely impact our results of operations, our ability to raise capital or our future growth. We are exposed to currency rate fluctuations and exchange controls that could adversely impact our operating results. 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. Our wavelength expansion products have accounted for a majority of our revenues, and our revenues could be harmed if the price of, or demand for, these products further declines or if these products fail to achieve broader market acceptance. 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. We are the target of a securities class action complaint and are at risk of securities class action litigation, which could result in costs and divert management attention and resources. Our lengthy and variable qualification and sales cycle requires us to incur substantial costs to make a sale, and if the sale does not occur then we will have incurred these expenses without obtaining increased sales. 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. Because some of our third-party sales representatives and distributors carry products of one or more of our competitors, they may not recommend our products over competitors products. Our failure to comply with governmental regulations could subject us to liability. Enacted and proposed changes in securities laws and regulations have increased and are likely to continue to increase our costs. 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. Because of the rapid changes taking place in the fiber optics industry, we expect to experience significant volatility in our stock price, which could cause you to lose all or part of your investment. 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--9/15/2006--OPLINK_COMMUNICATIONS_INC