1388133--9/27/2007--ShoreTel

related topics

{product, market, service}

{system, service, information}

{customer, product, revenue}

{property, intellectual, protect}

{acquisition, growth, future}

{personnel, key, retain}

{stock, price, operating}

{competitive, industry, competition}

{stock, price, share}

{operation, natural, condition}

{control, financial, internal}

{regulation, change, law}

{cost, regulation, environmental}

{operation, international, foreign}

{condition, economic, financial}

The market in which we operate is intensely competitive, and many of our competitors are larger, more established and better capitalized than we are. As voice and data networks converge, we are likely to face increased competition from companies in the information technology, personal and business applications and software industries. If the emerging market for enterprise IP telecommunications systems does not fully develop, our future business would be harmed. Our operating results may fluctuate in the future, which could cause our stock price to decline. We rely on third-party resellers to sell our products, and disruptions to, or our failure to develop and manage, our distribution channels and the processes and procedures that support them could adversely affect our business. 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. Our business may be harmed if our contract manufacturers are not able to provide us with adequate supplies. The gross margins on our products may decrease due to competitive pressures or otherwise, which could negatively impact our profitability. If we fail to make necessary improvements to address a material weakness in our internal control over financial reporting, we may not be able to report our financial results accurately and timely, any of which could harm our business, reputation and cause the price of our common stock to decline. We are incurring significant increased costs as a result of operating as a public company, and our management will is required to devote substantial time to public company compliance initiatives. These added costs and required management focus could adversely affect our operating results. 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. If we fail to respond to technological changes and evolving industry standards, our products could become obsolete or less competitive 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. Our business could be harmed by adverse economic conditions in our target markets or reduced spending on information technology and telecommunication products. 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. If we fail to manage our growth effectively, our business could be harmed. We intend to expand our international operations, which could expose us to significant 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. Our products include third-party technology and intellectual property, which could present additional 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 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. 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. 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.

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1388133--9/27/2007--ShoreTel_Inc