1030471--3/3/2008--UTSTARCOM

related topics

{operation, international, foreign}

{product, market, service}

{customer, product, revenue}

{acquisition, growth, future}

{regulation, change, law}

{financial, litigation, operation}

{cost, regulation, environmental}

{property, intellectual, protect}

{personnel, key, retain}

{control, financial, internal}

{stock, price, operating}

{investment, property, distribution}

{system, service, information}

{stock, price, share}

{cost, operation, labor}

{competitive, industry, competition}

{loan, real, estate}

{provision, law, control}

{tax, income, asset}

We have incurred net losses in the past and may not have sufficient cash on hand to execute our business plan. We may need to obtain additional funding from outside sources, including the sale of our securities, divestiture of assets, or obtaining loans from financial institutions, to have sufficient cash resources and liquidity to continue our operations. Our ability to accomplish these actions is not assured, and our ability to raise funds for other purposes is uncertain. The restatement of our consolidated financial statements following the Nominating and Corporate Governance Committee's and management's review of our past stock option granting practices and the Audit Committee's and management's review of certain sales in China has resulted in expanded litigation and regulatory proceedings and other consequences which have and could continue to adversely impact our business, including our financial results. Our future product sales are unpredictable and, as a result, our operating results are likely to fluctuate from quarter to quarter. Competition in our markets may lead to reduced prices, revenues and market share. Sales in China have historically accounted for a material portion of our total sales, and our business, financial condition and results of operations are to a significant degree subject to economic, political and social events, and the performance of our senior management team in China. Our success depends on continuing to hire and retain qualified personnel, including for senior management positions, and if we are not successful in attracting and retaining these personnel and in managing key employee turnover, our business will suffer") The average selling prices of our products may decrease, which may reduce our revenues and our gross profit. As a result, we must introduce new products and reduce our costs in order to maintain profitability. Our market is subject to rapid technological change, and to compete effectively, we must continually introduce new products and product enhancements that achieve market acceptance. We depend on some sole source and key suppliers for handsets, base stations, components and materials used in our products. If we cannot secure adequate supplies of high quality products at competitive prices or in a timely manner from these suppliers or sources, or if the suppliers successfully market their products directly to our customers, our competitive position, reputation and business could be harmed. We face risks related to pending governmental inquiries. Product defects or performance quality issues could cause us to lose customers and revenue or to incur unexpected expenses. Our global diversification strategy and growth has strained our resources, adversely affected our reported gross margins, and if we are unable to manage this growth, our future operating results will be further negatively affected. Any failure by us to execute successfully on our business plan, including our cost reduction strategy, could result in total costs and expenses that are greater than expected which would adversely affect our operating results. Our success depends on continuing to hire and retain qualified personnel, including for senior management positions, and if we are not successful in attracting and retaining these personnel and in managing key employee turnover, our business will suffer. Any acquisitions and divestitures that we undertake could be difficult to integrate, disrupt our business, require significant attention of management, distract our employees, dilute our stockholders and harm our operating results. We may be unable to adequately protect the loss or misappropriation of our intellectual property, which could substantially harm our business. We may be subject to claims that we infringe the intellectual property rights of others, which could substantially harm our business. Our multinational operations subject us to various economic, political, regulatory and legal risks. We are subject to risks related to our financial and strategic investments in third party businesses. We do business in markets that are not fully developed, which subjects us to various economic, political, regulatory and legal risks unique to developing economies. Our wireless handset products are subject to a wide range of environmental, health and safety laws, and may expose us to potential health and environmental liability claims. We are subject to a wide range of environmental, health and safety laws and efforts to comply with such laws may be costly and may adversely impact our financial performance. Currency rate fluctuations and exchange controls may adversely affect our cash flow and operating results. Business interruptions could adversely affect our business. We may suffer losses with respect to equipment held at customer sites, which could harm our business. Restrictions on the use of handsets while driving a motor vehicle could affect our future growth. We have been named as a defendant in securities litigation and other lawsuits, as well as lawsuits in the ordinary course of business. Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price. China's governmental and regulatory reforms may impact our ability to do business in China. China's changing economic environment may impact our ability to do business in China. China's entry into the World Trade Organization and relaxation of trade restrictions have led to increased foreign investment in China's telecommunications industry and may lead to increased competition in our markets which may have an adverse impact on our business. Uncertainties with respect to the Chinese legal system may adversely affect us. If tax benefits available to our subsidiaries located in China are reduced or repealed, we could face higher tax rates which may have an adverse impact on our business. Our ability to continue successful deployment of PAS system and sales of PAS handsets are limited by certain factors, including the following: Maturing PAS market and increased competition in handsets and tariffs. Our PAS system and handsets sales may experience a sharp decline if China Telecom or China Netcom obtain licenses allowing them to deliver mobile services or the integration of the telecom operators. We only have trial licenses for the PAS system and handsets in China. Increasing centralization of purchasing decision-making by carriers may lead to customer concentration and affect the results of our business. Television over the internet is a new business in China and laws regulating the business have not been fully developed and may be unpredictable. Unfavorable regulation of the industry may adversely affect our IPTV operations in China and negatively impact our business. We currently do not have a license to engage in the IPTV operator service business in China and development of our IPTV business depends upon the cooperation of IPTV license holder(s) and network operators. If we are unable to work cooperatively with license holder(s) and network operators, our business may suffer. Our stock price is highly volatile. SOFTBANK CORP. with its related entities, including SOFTBANK America Inc., has significant influence over our management and affairs, which it could exercise against the best interests of our stockholders. Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover, even if the transaction would benefit our stockholders. Our failure to timely file periodic reports with the Securities and Exchange Commission could result in the delisting of our common stock from the NASDAQ National Market and cause us to default on covenants contained in contractual arrangements.

Full 10-K form ▸

1030471--3/3/2008--UTSTARCOM_INC