1104042--3/8/2007--ADVANCED_ANALOGIC_TECHNOLOGIES

related topics

{customer, product, revenue}

{product, market, service}

{control, financial, internal}

{system, service, information}

{property, intellectual, protect}

{acquisition, growth, future}

{operation, international, foreign}

{product, liability, claim}

{stock, price, operating}

{condition, economic, financial}

{operation, natural, condition}

{personnel, key, retain}

{product, candidate, development}

{loss, insurance, financial}

{stock, price, share}

{regulation, change, law}

Risks Related To Our Business Our customers may cancel their orders, change production quantities or delay production, and if we fail to forecast demand for our products accurately, we may incur product shortages, delays in product shipments or excess or insufficient product inventory. We receive a substantial portion of our revenues from a small number of customers, and the loss of, or a significant reduction in, orders from those customers or our other largest customers would adversely affect our operations and financial condition. Our operating results have fluctuated in the past and we expect our operating results to continue to fluctuate. We may be unsuccessful in developing and selling new products or in penetrating new markets. Due to defects and failures that may occur, our products may not meet specifications, which may cause customers to return or stop buying our products and may expose us to product liability claims. The nature of the design process requires us to incur expenses prior to earning revenues associated with those expenses, and we will have difficulty selling our products if system designers do not design our products into their electronic systems. Any increase in the manufacturing cost of our products could reduce our gross margins and operating profit. The average selling price of our products may decline, or a change in the mix of product orders may occur, either of which could reduce our gross margins. Because we receive a substantial portion of our revenues through distributors, their financial viability and ability to access the capital markets could impact our ability to continue to do business with them and could result in lower revenues, which could adversely affect our operating results and our customer relationships. Our distributor arrangements often require us to accept product returns and to provide price protection and if we fail to properly estimate our product returns and price protection reserves, this may adversely impact our reported financial information Our distributor arrangements often require us to accept returns of unsold products if contractual arrangements with a distributor are terminated, which could harm our operating results or, if we fail to take steps, could harm our relationship with these distributors and lead to a loss of revenues We have a limited operating history, and we may have difficulty accurately predicting our future revenues for the purpose of appropriately budgeting and adjusting our expenses. Our current backlog may not be indicative of future sales. If consumer demand for mobile consumer electronic devices declines, our revenues will decrease. Substantially all of our customers and operations are located in Asia, which subjects us to additional risks, including regional economic influences, logistical complexity, political instability and currency fluctuations. We outsource our wafer fabrication, testing, packaging, warehousing and shipping operations to third parties, and rely on these parties to produce and deliver our products according to requested demands in specification, quantity, cost and time. The loss of any of our key personnel could seriously harm our business, and our failure to attract or retain specialized technical and management talent could impair our ability to grow our business. We compete against companies with substantially greater financial and other resources, and our market share or gross margins may be reduced if we are unable to respond to competitive challenges effectively. Assertions by third parties of infringement by us of their intellectual property rights could result in significant costs, reduce sales of our products and cause our operating results to suffer. Our failure to protect our intellectual property rights adequately could impair our ability to compete effectively or to defend ourselves from litigation, which could harm our business, financial condition and results of operations. We do not expect to sustain our recent growth rate, and we may not be able to manage any future growth effectively. Any acquisitions we make could disrupt our business, result in integration difficulties or fail to realize anticipated benefits, which could adversely affect our financial condition and operating results. The cyclical nature of the semiconductor industry, which has historically demonstrated significant and prolonged downturns, could impact our operating results, financial condition and cash flows. Our business may be adversely impacted if our end customers cannot obtain sufficient supplies of other components in their products to meet their production projections and target quantities. We, our manufacturing suppliers and our end customers operate facilities located in regions subject to earthquakes and other natural disasters. A failure of our information systems would adversely impact our ability to process orders for and manufacture products. A failure to maintain our international structure may adversely affect our tax rate, financial condition and operating results. The requirement that we expense employee stock options has significantly reduced our net income and will continue to do so in future periods. We have incurred and will continue to incur increased costs as a result of being a public company. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results, our business could be harmed and our stock price could decline.

Full 10-K form ▸

1104042--3/8/2007--ADVANCED_ANALOGIC_TECHNOLOGIES_INC