1130626--3/12/2007--LEADIS_TECHNOLOGY

related topics

{customer, product, revenue}

{product, market, service}

{stock, price, operating}

{acquisition, growth, future}

{property, intellectual, protect}

{control, financial, internal}

{personnel, key, retain}

{condition, economic, financial}

{operation, international, foreign}

{regulation, change, law}

{operation, natural, condition}

{product, liability, claim}

{product, candidate, development}

We depend on a small number of key customers for substantially all of our revenue and the loss of, or a significant reduction in orders from, any key customer would significantly reduce our revenue and adversely impact our operating results. Our customers include our products in displays sold to a small number of handset manufacturers, and the loss of business by our customers with these handset manufacturers could adversely affect our business. Our efforts to expand our product portfolio and enter into new markets have attendant execution risk. We may undertake acquisitions to expand our business that may pose risks to our business, reduce our cash balance and dilute the ownership of our existing stockholders. If we are unable to timely develop new and enhanced products that achieve market acceptance, our operating results and competitive position could be harmed. If we are unable to comply with evolving customer specifications and requirements, customers may choose other products instead of our own. The average selling prices of our products tend to decline over time, often rapidly, and if we are unable to develop successful new products in a timely manner, our operating results will be harmed. We are dependent on sales of a small number of products, and the absence of continued market acceptance of these products could harm our business. Our business is highly dependent on the mobile handset market, which is highly concentrated and characterized by significant price competition, short product life cycles, fluctuations in demand, and seasonality, any of which could negatively impact our business or results of operations. Our revenue has fluctuated significantly from year to year, so you should not rely on the results of any past periods as an indication of future revenue performance or growth. We have incurred losses in prior periods and will incur losses in the future. Our quarterly financial results fluctuate, which leads to volatility in our stock price. Our products are complex and may require modifications to resolve undetected errors or failures, which could lead to an increase in our costs, a loss of customers or a delay in market acceptance of our products. Our products must interoperate with the display module components supplied to our customers by other suppliers. Failure to transition to new manufacturing process technologies could adversely affect our operating results and gross margin. Our limited operating history makes it difficult for us to accurately forecast revenue and appropriately plan our expenses. If we fail to accurately forecast customer demand, we may have excess or insufficient inventory, which may increase our operating costs and harm our business. Our customer orders are subject to cancellation, reduction or delay in delivery schedules, which may result in lower than anticipated revenue. We face significant competition and may be unsuccessful in competing against current and future competitors. We face competition from businesses related to our customers, which could harm our business. We rely on a limited number of independent foundries and subcontractors for the manufacture, assembly and testing of our chipsets and on a third party logistics provider to ship products to our customers. The failure of any of these third-party vendors to deliver products or otherwise perform as requested could damage our relationships with our customers, decrease our sales and limit our growth. We face risks associated with relying on third-party vendors for the manufacture, assembly and testing of our products. We do not have long-term supply contracts with our third-party manufacturing vendors and they may allocate capacity to other customers and may not allocate sufficient capacity to us to meet future demands for our products. Failure to achieve expected manufacturing yields for existing and/or new products would reduce our gross margin and could adversely affect our ability to compete effectively. Use of our customized manufacturing process by our foundry contractors in connection with their manufacturing of our competitors products could harm our business. The semiconductor industry is highly cyclical, and our operating results may be negatively impacted by downturns in the general semiconductor industry. Any disruption to our operations or the operations of our foundry, assembly and test contractors resulting from earthquakes or other natural disasters could cause significant delays in the production or shipment of our products. We rely on our key personnel to manage our business, and if we are unable to retain our current personnel and hire additional personnel, our ability to develop and successfully market our products could be harmed. Our ability to compete will be harmed if we are unable to adequately protect our intellectual property. Assertions by third parties of infringement by us of their intellectual property rights could result in significant costs and cause our operating results to suffer. We have significant international activities and customers, and plan to continue such efforts, which subjects us to additional business risks including increased logistical complexity, political instability and currency fluctuations. Our inability to effectively manage growth in our operations may prevent us from successfully expanding our business. Difficulties in collecting accounts receivable could result in significant charges against income and the deferral of revenue recognition from sales to affected customers, which could harm our operating results and financial condition. We may need to raise additional capital, which might not be available or which, if available, may be on terms that are not favorable to us. Our stock price is volatile, which could result in substantial losses for investors and significant costs related to litigation. Our principal stockholders have significant voting power and may influence actions that may not be in the best interests of our other stockholders. Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

Full 10-K form ▸

1130626--3/12/2007--LEADIS_TECHNOLOGY_INC