1030471--6/1/2006--UTSTARCOM

related topics

{operation, international, foreign}

{product, market, service}

{customer, product, revenue}

{regulation, change, law}

{acquisition, growth, future}

{financial, litigation, operation}

{cost, operation, labor}

{cost, regulation, environmental}

{property, intellectual, protect}

{control, financial, internal}

{stock, price, operating}

{system, service, information}

{stock, price, share}

{competitive, industry, competition}

{loan, real, estate}

{investment, property, distribution}

{personnel, key, retain}

{provision, law, control}

{tax, income, asset}

{debt, indebtedness, cash}

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. If we seek to secure additional financing and are not able to do so, our ability to expand strategically may be limited. If we are able to secure additional financing, our stockholders may experience dilution of their ownership interest, or we may be subject to limitations on our operations and increased leverage. 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. 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 in China. 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, as well as international sources, 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. 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, and if we are unable to manage this growth, our operating results will be negatively affected. Any failure by us to execute planned cost reductions successfully could result in total costs and expenses that are greater than expected. Our success is dependent on continuing to hire and retain qualified personnel, 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, 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 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. We are subject to risks relating to currency rate fluctuations and exchange controls. 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 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. We face risks related to pending Governmental Inquiries. 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. Recently enacted changes in securities laws and regulations may result in additional expenses. Changes in accounting rules will increase our compensation expense and may adversely affect our net income. Our ability to complete our planned restructuring and cost-reduction actions and the impact of such actions on our business may be affected by a variety of factors. These actions may, in turn, expose us to additional operation risks and have an adverse effect on our sales and profitability. 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, our business could suffer. 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. 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 are 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. Together with the holders of our convertible subordinated notes due in 2008, we face a variety of risks related to the notes. 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--6/1/2006--UTSTARCOM_INC