1116521--12/8/2006--AVAYA_INC

related topics
{product, market, service}
{tax, income, asset}
{property, intellectual, protect}
{acquisition, growth, future}
{operation, international, foreign}
{cost, operation, labor}
{customer, product, revenue}
{financial, litigation, operation}
Risks Related To Our Revenue and Business Strategy A key component of our strategy is our focus on the development and sale of advanced communication s products and applications and related services, including IP telephony solutions, and this strategy may not be successful. We face intense competition from our current competitors and, as the enterprise communications an d information technology markets evolve, may face increased competition from companies that do not currently compete directly against us. Although our revenue has continued to increase since 2003, we recently have experienced difficulties i n significantly growing our revenue other than through acquisitions. Risks Related To Our Operations If we are unable to integrate acquired businesses into ours effectively, our operating results may b e adversely affected. Even if we are successful, the integration of these businesses has required, and will likely continue to require, significant resources and management attention. We rely on outsourced product manufacturers, distributors and warehousing agents for our products an d various issues with respect to the delivery of our products could arise which could adversely impact both our revenue and our costs. If we are unable to protect our proprietary rights, our business and future prospects may be harmed. As our international business has grown significantly in the last two fiscal years, changes in economic or political conditions in a specific country or region could negatively affect our revenue, costs, expenses and financial condition. Risks Related to Contingent Liabilities We may incur liabilities as a result of our obligation to indemnify, and to share certain liabilities with, Lucent in connection with our spin-off from Lucent in September 2000. We may be subject to litigation and infringement claims, which could cause us to incur significan t expenses or prevent us from selling our products or services. If the distribution does not qualify for tax-free treatment, we could be required to pay Lucent or the Internal Revenue Service a substantial amount of money.

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