320193--12/29/2006--APPLE_COMPUTER

related topics

{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{financial, litigation, operation}

{condition, economic, financial}

{stock, price, operating}

{system, service, information}

{regulation, change, law}

{operation, natural, condition}

{capital, credit, financial}

{property, intellectual, protect}

{personnel, key, retain}

{cost, regulation, environmental}

{loss, insurance, financial}

{operation, international, foreign}

{tax, income, asset}

{cost, operation, labor}

{cost, contract, operation}

The matters relating to the investigation by the Special Committee of the Board of Directors and the restatement of the Company s consolidated financial statements may result in additional litigation and governmental enforcement actions. Unfavorable results of legal proceedings could adversely affect the Company s results of operations. Economic conditions and political events could adversely affect the demand for the Company s products and the financial health of its suppliers, distributors, and resellers. War, terrorism, public health issues, and other circumstances could disrupt supply, delivery, or demand of products, which could negatively affect the Company s operations and performance. The market for personal computers and related peripherals and services, as well as digital music devices and related services, is highly competitive. If the Company is unable to effectively compete in these markets, its results of operations could be adversely affected. Future operating results are dependent upon the Company s ability to obtain a sufficient supply of components, including microprocessors, some of which are in short supply or available only from limited sources. The Company must successfully manage frequent product introductions and transitions to remain competitive and effectively stimulate customer demand. The Company s products from time to time experience quality problems that can result in decreased net sales and operating profits. Because orders for components, and in some cases commitments to purchase components, must be placed in advance of customer orders, the Company faces substantial inventory risk. The Company is dependent on manufacturing and logistics services provided by third parties, many of whom are located outside of the U.S. The Company s future operating performance is dependent on the performance of distributors and other resellers of the Company s products. The Company relies on third-party digital content, which may not be available to the Company on commercially reasonable terms or at all. The Company s future performance is dependent upon support from third-party software developers. If third-party software applications cease to be developed or available for the Company s hardware products, then customers may choose not to buy the Company s products. The Company s business relies on access to patents and intellectual property obtained from third parties, and the Company s future results could be adversely affected if it is alleged or found to have infringed on the intellectual property rights of others. The Company s retail initiative has required and will continue to require a substantial investment and commitment of resources and is subject to numerous risks and uncertainties. Investment in new business strategies and initiatives could disrupt the Company s ongoing business and may present risks not originally contemplated. Declines in the sales of the Company s professional products, software, accessories, or service and support contracts, or increases in sales of consumer products, including iPods, may negatively impact the Company s gross margin and operating margin percentages. The Company expects its quarterly revenue and operating results to fluctuate for a variety of reasons. The Company has higher research and development and selling, general and administrative costs, as a percentage of revenue, than many of its competitors. The Company is exposed to credit risk on its accounts receivable and prepayments related to long-term supply agreements. This risk is heightened during periods when economic conditions worsen. The Company s success depends largely on its ability to attract and retain key personnel. The Company is subject to risks associated with the availability and coverage of insurance. Failure of information technology systems and breaches in the security of data upon which the Company relies could adversely affect the Company s future operating results. The Company s business is subject to the risks of international operations. The Company is subject to risks associated with environmental regulations. Changes in accounting rules could affect the Company s future operating results. Changes in the Company s tax rates could affect its future results. The Company s stock price may be volatile.

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320193--12/29/2006--APPLE_COMPUTER_INC