1109808--3/6/2006--AVOCENT

related topics

{customer, product, revenue}

{operation, international, foreign}

{product, market, service}

{acquisition, growth, future}

{tax, income, asset}

{product, liability, claim}

{property, intellectual, protect}

{personnel, key, retain}

{provision, law, control}

{capital, credit, financial}

{cost, regulation, environmental}

{stock, price, operating}

Intense competition from new and existing competitors could impair our ability to grow our business and sell our products and technologies. Our failure to respond to rapid technological change or to introduce successful new products and technologies may result in reduced revenue or revenue growth. We are likely to experience fluctuations in operating results. Due to the international nature of our business, political or economic changes or other factors could harm our future revenue, increase our costs and expenses, and impair our financial condition. Our gross margins are expected to vary and may decline. A substantial portion of our business consists of sales to a limited number of OEM customers that are not obligated to continue doing business with us, and these sales vary considerably from quarter to quarter. A substantial portion of our business consists of sales of branded products, and these sales are difficult to forecast. Failure to accurately forecast these sales could lead to costly overproduction or product shortages. We will need to expand sales through distributors and resellers in order to develop our business and increase revenue. If we are unable to successfully develop our international distribution networks and international sales efforts, results of operations may suffer. We are dependent upon third-party suppliers and outsourced manufacturing. Disruption of our access to these supplies and services, or problems with the quality of supplies or services, could prevent us from filling customer orders and harm our business. Our products are subject to warranty claims and returns. Increased warranty claims or returns could harm our business. We must meet the increased demands on customer service operations or customer satisfaction and sales could suffer. Executive officers and other key personnel may depart, which could adversely affect our results of operations and harm our ability to grow the business. Difficulties encountered during changing economic conditions could adversely affect our results of operations. We have limited protection of proprietary rights and face risks of third party infringements. We have acquired, and expect to continue to acquire, technologies and companies that could disrupt our business or expose us to other risks. Our failure to manage these risks and challenges could materially harm our business, financial condition, and results of operations. Further, if we do not successfully address these challenges in a timely manner, we may not fully realize all of the anticipated benefits or synergies on which the value of a transaction was based. Future transactions could cause our financial results to differ from expectations of market analysts or investors for any given quarter. Our reorganization into five separate business divisions or units could disrupt our business or affect our profitability. Unanticipated changes in our tax rates or exposure to additional income tax liabilities could affect our profitability. Fluctuations in the value of foreign currencies could result in currency exchange losses. Unforeseen environmental costs could negatively affect our future earnings. Provisions in our charter documents and in Delaware law may discourage potential acquisition bids for us and may prevent changes in management that stockholders may favor.

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1109808--3/6/2006--AVOCENT_CORP