1043604--3/7/2006--JUNIPER_NETWORKS

related topics

{customer, product, revenue}

{operation, international, foreign}

{system, service, information}

{product, market, service}

{acquisition, growth, future}

{personnel, key, retain}

{control, financial, internal}

{product, candidate, development}

{regulation, government, change}

{property, intellectual, protect}

{tax, income, asset}

{financial, litigation, operation}

{competitive, industry, competition}

We face intense competition that could reduce our revenues and adversely affect our financial results. The long sales and implementation cycles for our products, as well as our expectation that some customers will sporadically place large orders with short lead times, may cause our revenues and operating results to vary significantly from quarter to quarter. We are dependent on sole source and limited source suppliers for several key components, which makes us susceptible to shortages or price fluctuations in our supply chain and we may face increased challenges in supply chain management in the future. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience manufacturing delays which would harm our business. We are dependent on contract manufacturers with whom we do not have long-term supply contracts, and changes to those relationships, expected or unexpected, may result in delays or disruptions that could cause us to lose revenue and damage our customer relationships. Integration of past acquisitions and future acquisitions could disrupt our business and harm our financial condition and stock price and may dilute the ownership of our stockholders. We rely on value-added resellers and distribution partners to sell our products, and disruptions to, or our failure to effectively develop and manage our distribution channel and the processes and procedures that support it could adversely affect our ability to generate revenues from the sale of our products. We expect gross margin to vary over time and our recent level of product gross margin may not be sustainable. Recent rulemaking by the Financial Accounting Standards Board will require us to expense equity compensation given to our employees and will significantly harm our operating results and may reduce our ability to effectively utilize equity compensation to attract and retain employees. Our reported financial results could suffer if there is an impairment of goodwill or other intangible assets with indefinite lives. Our ability to process orders and ship product is dependent in part on our business systems and upon interfaces with the systems of third parties such as our suppliers or other partners. If our systems, the systems of those third parties or the interfaces between them fail, our business processes could be impacted and our financial results could be harmed. Our products are highly technical and if they contain undetected errors, our business could be adversely affected and we might have to defend lawsuits or pay damages in connection with any alleged or actual failure of our products and services. A breach of network security could harm public perception of our security products, which could cause us to lose revenues. If we do not successfully anticipate market needs and develop products and product enhancements that meet those needs, or if those products do not gain market acceptance, we may not be able to compete effectively and our ability to generate revenues will suffer. If our products do not interoperate with our customers networks, installations will be delayed or cancelled and could harm our business. Litigation or claims regarding intellectual property rights may be time consuming, expensive and require a significant amount of resources to prosecute, defend or make our products non-infringing. We are a party to lawsuits, which, if determined adversely to us, could require us to pay damages which could harm our business and financial condition. Due to the global nature of our operations, economic or social conditions or changes in a particular country or region could adversely affect our sales or increase our costs and expenses, which could have a material adverse impact on our financial condition. We are exposed to fluctuations in currency exchange rates which could negatively affect our financial results and cash flows. Traditional telecommunications companies and other large companies generally require more onerous terms and conditions of their vendors. As we seek to sell more products to such customers, we may be required to agree to terms and conditions that may have an adverse effect on our business. Our products incorporate and rely upon licensed third-party technology and if licenses of third-party technology do not continue to be available to us or become very expensive, our revenues and ability to develop and introduce new products could be adversely affected. Our ability to develop, market and sell products could be harmed if we are unable to retain or hire key personnel. Our success depends upon our ability to effectively plan and manage our resources and restructure our business through rapidly fluctuating economic and market conditions. Past restructuring efforts may prove to be inadequate or may impair our ability to realize our current or future business objectives. If we fail to adequately evolve our financial and managerial control and reporting systems and processes, our ability to manage and grow our business will be negatively affected. We are subject to risks arising from our international operations. While we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from recent legislation requiring companies to evaluate those internal controls. Governmental regulations affecting the import or export of products could negatively affect our revenues. Regulation of the telecommunications industry could harm our operating results and future prospects.

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1043604--3/7/2006--JUNIPER_NETWORKS_INC