1093885--3/15/2006--SONICWALL

related topics

{customer, product, revenue}

{control, financial, internal}

{system, service, information}

{financial, litigation, operation}

{product, market, service}

{property, intellectual, protect}

{personnel, key, retain}

{stock, price, operating}

{acquisition, growth, future}

{product, liability, claim}

{operation, international, foreign}

{condition, economic, financial}

{regulation, government, change}

{operation, natural, condition}

{cost, regulation, environmental}

{loss, insurance, financial}

{competitive, industry, competition}

{stock, price, share}

We depend on two major distributors for a significant amount of our revenue, and if they or others cancel or delay purchase orders, our revenue may decline and the price of our stock may fall. If we are unable to compete successfully in the highly competitive market for Internet security products and services, our business could be adversely affected. Difficulty predicting our future operating results or profitability due to volatility in general economic conditions and the Internet security market may result in a misallocation in spending, and a shortfall in revenue which would harm our operating results The selling prices of our solution-based product, software and services offerings may decrease, which may reduce our gross profits. We offer retroactive price protection to our major distributors and if we fail to balance their inventory with end- user demand for our products, our allowance for price protection may be inadequate. This could adversely affect our results of operations. We are dependent on international sales for a substantial amount of our revenue. We face the risk of international business and associated currency fluctuations, which might adversely affect our operating results. Delays in deliveries from our suppliers could cause our revenue to decline and adversely affect our results of operations. We license intellectual property, including certain databases and software, and if our licensors experience delays in product updates or provide us with products of substandard quality, the revenue we receive from our products and services that use this intellectual property would be at risk. We rely primarily on contract manufacturers for our product manufacturing and assembly, and if these operations are disrupted for any reason, we may not be able to ship our products. Sales of our products may be adversely affected by various factors which would adversely affect our revenue. Environmental regulations enacted in various jurisdictions in which we do business may increase the component costs of our products and if we experience delays in shipment of complaint products our revenue would decline and our operating results would be adversely affected. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results. As a result, current and potential stockholders could lose confidence in our financial reporting which would harm our business and the trading price of our stock. Acquisitions could be difficult to integrate, disrupt our business, dilute shareholder value and the products and services acquired may not be accepted by the market. As a result, our operating results would be adversely affected. We have been unable to predict accurately the costs associated with evaluating our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 and may continue to be unable to do so in the future. We cannot be certain that the remediation efforts concerning our internal control over financial reporting will be effective or sufficient. Our Financial Statements could be affected by the need to restate previously issued annual or interim financial statements. We cannot be certain that our internal controls over financial reporting will be effective or sufficient when tested by increased scale of growth or the impact of acquisitions. We must attract and retain qualified financial personnel to maintain effective controls over the application of generally accepted accounting principles within the financial reporting process. If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below expectations of securities analysts and investors, resulting in a decline in our stock price. Changes to our senior management may have an adverse effect on our ability to execute our business strategy. We must be able to hire and retain sufficient qualified employees or our business will be adversely affected. We may be unable to adequately protect our intellectual property proprietary rights, which may limit our ability to compete effectively. Potential intellectual property claims and litigation could subject us to significant liability for damages and invalidation of our proprietary rights. We have been named as defendant in litigation matters that could subject us to liability for significant damages. We may have to defend lawsuits or pay damages in connection with any alleged or actual failure of our products and services. A security breach of our internal systems or those of our customers could harm our business. If our products do not interoperate with our end customers networks, installations could be delayed or cancelled, which could significantly reduce our revenue. Product errors or defects could result in loss of revenue, delayed market acceptance and claims against us. Industry consolidation may lead to increased competition and may harm our operating results. If we are unable to meet our future capital requirements, our business will be harmed. Governmental regulations of imports or exports affecting Internet security could affect our revenue. Our stock price may be volatile. The long sales and implementation cycles for our products may cause revenue and operating results to vary significantly. The inability to obtain any third-party license required developing new products and product enhancements could require us to obtain substitute technology of lower quality or performance standards or at greater cost, which could seriously harm our business, financial condition and results of operations. Seasonality and concentration of revenue at the end of the quarter could cause our revenue to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price. The requirement to record compensation expense for the value of stock options or other stock-based awards that we issue to our employees will harm our earnings. Our business is especially subject to the risks of earthquakes, floods and other natural catastrophic events, and to interruption by manmade problems such as computer viruses or terrorism.

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1093885--3/15/2006--SONICWALL_INC