1111928--3/29/2007--IPG_PHOTONICS

related topics

{stock, price, operating}

{customer, product, revenue}

{product, market, service}

{operation, international, foreign}

{property, intellectual, protect}

{personnel, key, retain}

{acquisition, growth, future}

{cost, regulation, environmental}

{product, liability, claim}

{condition, economic, financial}

{provision, law, control}

{cost, operation, labor}

{system, service, information}

Our vertically integrated business results in high levels of fixed costs that may adversely impact our gross profits and our operating results in the event of a reduction in demand for our products. We are subject to lawsuits alleging that we are infringing third-party intellectual property rights. Intellectual property claims could result in costly litigation and harm our business. Our inability to protect our intellectual property and proprietary technologies could result in the unauthorized use of our technologies by third parties, hurt our competitive position and adversely affect our operating results. We depend upon internal production and on outside single or limited-source suppliers for many of our key components and raw materials. Any interruption in the supply of these key components and raw materials could adversely affect our results of operations. We rely on the significant experience and specialized expertise of our senior management and scientific staff and if we are unable to retain these key employees and attract other highly skilled personnel necessary to grow our business successfully, our business and results of operations could suffer. Failure to effectively build and expand our direct field service and support organization could have an adverse effect on our business. The laser and amplifier industries may experience declining average selling prices, which could cause our gross margins to decline and harm our operating results. A few customers account for a significant portion of our sales, and if we lose any of these customers or they significantly curtail their purchases of our products, our results of operations could be adversely affected. We have experienced, and expect to experience in the future, fluctuations in our quarterly operating results. These fluctuations may increase the volatility of our stock price. Our manufacturing capacity may not be at the appropriate size for future levels of demand. Future downturns in the economy, particularly in the materials processing and communications markets, could have a material adverse effect on our sales and profitability. We depend on our OEM customers and system integrators and their ability to incorporate our products into their systems Because we lack long-term purchase commitments from our customers, our sales can be difficult to predict, which could adversely affect our operating results. The markets for our products are highly competitive and increased competition could increase our costs, reduce our sales or cause us to lose market share. Our inability to manage risks associated with our international customers and operations could adversely affect our business. Foreign currency transaction risk may negatively affect our net sales, cost of sales and operating margins and could result in exchange losses. Our products could contain defects, which may reduce sales of those products, harm market acceptance of our fiber laser products or result in claims against us. We may pursue acquisitions and investments in new businesses, products or technologies. These may involve risks which could disrupt our business and may harm our financial condition. We are subject to various environmental laws and regulations that could impose substantial costs upon us and may adversely affect our business, operating results and financial condition. We are subject to export control regulations that could restrict our ability to increase our international sales and may adversely affect our business. We could be the subject of securities class action litigation due to future stock price volatility, which could divert management s attention and adversely affect our operating results. Dr. Valentin P. Gapontsev, our chairman, chief executive officer and principal stockholder, controls more than 46.6% of our voting power, and has a significant influence on the outcome of director elections and other matters requiring stockholder approval, including a change in corporate control. Dr. Valentin P. Gapontsev, our chairman, chief executive officer and principal stockholder, owns a material portion of one of our operating subsidiaries, which creates the possibility of a conflict of interest. Anti-takeover provisions in our charter documents and Delaware law could prevent or delay a change in control of our company, even if a change in control would be beneficial to our stockholders. Substantial sales of our common stock could cause our stock price to decline.

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1111928--3/29/2007--IPG_PHOTONICS_CORP