1177394--2/13/2007--SYNNEX

related topics

{customer, product, revenue}

{stock, price, operating}

{condition, economic, financial}

{operation, international, foreign}

{regulation, change, law}

{system, service, information}

{product, market, service}

{acquisition, growth, future}

{property, intellectual, protect}

{provision, law, control}

{capital, credit, financial}

{operation, natural, condition}

{control, financial, internal}

{debt, indebtedness, cash}

{personnel, key, retain}

{gas, price, oil}

Risks Related to Our Business We anticipate that our revenue and operating results will fluctuate, which could adversely affect the price of our common stock. We depend on a small number of OEMs to supply the IT products that we sell and the loss of, or a material change in, our business relationship with a major OEM supplier could adversely affect our business, financial position and operating results. Our gross margins are low, which magnifies the impact of variations in revenue, operating costs and bad debt on our operating results. Because we sell on a purchase order basis, we are subject to uncertainties and variability in demand by our reseller and contract assembly customers, which could decrease revenue and adversely affect our operating results. We are subject to the risk that our inventory value may decline, and protective terms under our OEM supplier agreements may not adequately cover the decline in value, which in turn may harm our business, financial position and operating results. We depend on OEM suppliers to maintain an adequate supply of products to fulfill customer orders on a timely basis, and any supply shortages or delays could cause us to be unable to timely fulfill orders, which in turn could harm our business, financial position and operating results. We may suffer adverse consequences from changing interest rates. A portion of our revenue is financed by floor plan financing companies and any termination or reduction in these financing arrangements could increase our financing costs and harm our business and operating results. We have significant credit exposure to our reseller customers, and negative trends in their businesses could cause us significant credit loss and negatively impact our cash flow and liquidity position. We experienced theft of product from our warehouses and future thefts could harm our operating results. A significant portion of our contract assembly revenue comes from a single customer, and any decrease in sales from this customer could adversely affect our revenue. We have pursued and intend to continue to pursue strategic acquisitions or investments in new markets and may encounter risks associated with these activities, which could harm our business and operating results. We are dependent on a variety of IT and telecommunications systems, and any failure of these systems could adversely impact our business and operating results. We rely on independent shipping companies for delivery of products, and price increases or service interruptions from these carriers could adversely affect our business and operating results. Because we conduct substantial operations in China, risks associated with economic, political and social events in China could negatively affect our business and operating results. Changes in foreign exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results. Because of the experience of our key personnel in the IT products industry and their technological expertise, if we were to lose any of our key personnel, it could inhibit our ability to operate and grow our business successfully. We may become involved in intellectual property or other disputes that could cause us to incur substantial costs, divert the efforts of our management, and require us to pay substantial damages or require us to obtain a license, which may not be available on commercially reasonable terms, if at all. Because of the capital intensive nature of our business, we need continued access to capital, which, if not available to us or if not available on favorable terms, could harm our ability to operate or expand our business. The terms of our indebtedness agreements impose significant restrictions on our ability to operate which in turn may negatively affect our ability to respond to business and market conditions and therefore have an adverse effect on our business and operating results. We have significant operations concentrated in Northern California, South Carolina, Toronto and Beijing and any disruption in the operations of our facilities could harm our business and operating results. Global health, economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price. Part of our business is conducted outside of the United States, exposing us to additional risks that may not exist in the United States, which in turn could cause our business and operating results to suffer. Risks Related to Our Relationship with MiTAC International We rely on MiTAC International for certain manufacturing and assembly services and the loss of these services would require us to seek alternate providers that may charge us more for their services. Some of our customer relationships evolved from relationships between such customers and MiTAC International and the loss of such relationships could harm our business and operating results. There could be potential conflicts of interest between us and affiliates of MiTAC International, which could impact our business and operating results. As of November 30, 2006, our executive officers, directors and principal stockholders owned approximately 48% of our common stock and this concentration of ownership could allow them to control all matters requiring stockholder approval and could delay or prevent a change in control of SYNNEX. Risks Related to Our Industry Volatility in the IT industry could have a material adverse effect on our business and operating results. Our distribution business may be adversely affected by some OEM suppliers strategies to increase their direct sales, which in turn could cause our business and operating results to suffer. OEMs are limiting the number of supply chain service providers with which they do business, which in turn could negatively impact our business and operating results. The IT industry is subject to rapidly changing technologies and process developments, and we may not be able to adequately adjust our business to these changes, which in turn would harm our business and operating results. We are subject to intense competition in the IT industry, both in the United States and internationally, and if we fail to compete successfully, we will be unable to gain or retain market share. Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses. While we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from legislation requiring companies to evaluate those internal controls. Changes to financial accounting standards may affect our results of operations and cause us to change our business practices. Risks Related to Our Common Stock Our common stock has been subject to substantial price and volume fluctuations due to a number of factors, some of which are beyond our control. Significant fluctuations in the market price of our common stock could result in securities class action claims against us, which could seriously harm our operating results. Anti-takeover provisions in our restated certificate of incorporation may make it more difficult for someone to acquire us in a hostile takeover. If securities or industry analysts do not publish research or reports about our business, our stock price and trading volume could decline. We are subject to additional rules and regulations as a public company, which will increase our administration costs which in turn could harm our operating results.

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1177394--2/13/2007--SYNNEX_CORP