1388133--9/10/2010--ShoreTel

related topics

{product, market, service}

{customer, product, revenue}

{system, service, information}

{condition, economic, financial}

{property, intellectual, protect}

{stock, price, operating}

{personnel, key, retain}

{acquisition, growth, future}

{stock, price, share}

{competitive, industry, competition}

{provision, law, control}

{operation, natural, condition}

{control, financial, internal}

{tax, income, asset}

{cost, regulation, environmental}

{operation, international, foreign}

Risks Related to Our Business and Industry We may not be able to return to profitability. Current uncertainty in global economic conditions makes it particularly difficult to predict demand for our products, and makes it more likely that our actual results could differ materially from expectations. Our business could be harmed by adverse economic conditions in our target markets, reduced spending on information technology and telecommunication products by customers and potential customers, and the tightening of the credit markets. We have had significant executive management turnover, and may not be able to retain or attract the executives we need to succeed. Our future success depends on our ability to attract, integrate and retain key personnel, and our failure to do so could harm our ability to grow our business. We rely on third-party resellers to sell our products, and disruptions to, or our failure to develop and manage our distribution channels could adversely affect our business. If we fail to manage our growth effectively, our business could be harmed. If we fail to increase our consideration rate, our business could suffer. Our business may be harmed if our contract manufacturers are not able to provide us with adequate supplies. The market in which we operate is intensely competitive, and many of our competitors are larger, more established and better capitalized than we are. The gross margins on our products may decrease due to competitive pressures or otherwise, which could negatively impact our profitability. As voice and data networks converge, we are likely to face increased competition from Microsoft and other companies in the information technology, personal and business applications and software industries. If the emerging market for enterprise IP telecommunications systems does not continue to grow and if we do not increase our market share, our future business would be harmed. Our sales cycle can be lengthy and unpredictable, which makes it difficult to forecast the amount of our sales and operating expenses in any particular period. Our products incorporate some sole sourced components and the inability of these sole source suppliers to provide adequate supplies of these components may prevent us from selling our products for a significant period of time or limit our ability to deliver sufficient amounts of our products. If we fail to offer high quality customer support and services, our business would suffer. If we fail to forecast demand for our products accurately, we may have excess or insufficient inventory, which may increase our operating costs, decrease our revenues and harm our business. If we fail to develop and introduce new products and features in a timely manner, or if we fail to manage product transitions, we could experience decreased revenue or decreased selling prices in the future. Our products are highly complex and may contain undetected software or hardware errors, which could harm our reputation and future product sales. If we fail to respond to technological changes and evolving industry standards, our products could become obsolete or less competitive in the future. We intend to expand our international operations, which could expose us to significant risks. We are subject to environmental and other health and safety regulations that may increase our costs of operations or limit our activities. Some of our competitors could design their products to prevent or impair the interoperability of our products with enterprise customers networks, which could cause installations to be delayed or cancelled. Our products require reliable broadband connections, and we may be unable to sell our products in markets where broadband connections are not yet widely available. If our enterprise customers experience inadequate performance with their wide area networks, even if unrelated to our systems, our product performance could be adversely affected, which could harm our relationships with current enterprise customers and make it more difficult to attract new enterprise customers. We might require additional capital to support our business in the future, and this capital might not be available on acceptable terms, or at all. We are exposed to fluctuations in the market value of our money market funds and investments and financial pressure on investment institutions managing our investments may lead to restrictions on access to our investments which could harm our financial condition. Our products include third-party technology and intellectual property, which could present additional risks. Failure to protect our intellectual property could substantially harm our business. If a third party asserts that we are infringing on its intellectual property, whether successful or not, it could subject us to costly and time-consuming litigation or expensive licenses, which could harm our business. If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed. Our principal offices and the facilities of our contract manufacturers are located near known earthquake fault zones, and the occurrence of an earthquake or other catastrophic disaster could damage our facilities or the facilities of our contract manufacturers, which could cause us to curtail our operations. Risks Related to Ownership of Our Common Stock Our stock price in the past has been volatile, and may continue to be volatile or may decline regardless of our operating performance, and investors may not be able to resell shares at or above the price at which they purchased the shares. Our operating results may fluctuate in the future, which could cause our stock price to decline. Future sales of outstanding shares of our common stock into the market in the future could cause the market price of our common stock to drop significantly, even if our business is doing well. Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable and could also limit the market price of our stock.

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1388133--9/10/2010--ShoreTel_Inc