790715--5/8/2006--SIGMA_DESIGNS

related topics

{customer, product, revenue}

{product, market, service}

{stock, price, operating}

{control, financial, internal}

{property, intellectual, protect}

{regulation, change, law}

{competitive, industry, competition}

{personnel, key, retain}

{acquisition, growth, future}

{debt, indebtedness, cash}

{operation, international, foreign}

The average selling prices of our products have historically decreased rapidly and will likely do so in the future, which could harm our revenues and gross margins. Our business is highly dependent on the expansion of young and rapidly evolving segments of the consumer electronics market. We have a history of operating losses and we could sustain future losses. We cannot assure you that we will continue to be profitable and if we lose money, our business may not be financially viable. Our operating results are subject to significant fluctuations due to many factors and any of these factors could adversely affect our stock price Our industry is highly competitive and we cannot assure you that we will be able to effectively compete. If we fail to compete effectively, our growth could be substantially affected. The requirements of Section 404 of the Sarbanes-Oxley Act will increase our operating expenses, and the identification of material weaknesses in our internal controls as reported in our management assessment could adversely affect the market price of our stock. Sales risks and volatility of OEM customer sales and resale distribution may harm our business. We may engage in investments in and acquisitions of other businesses and technologies, which could divert management s attention and prove difficult to integrate with our existing business and technology. Because we depend on a limited number of major customers, the reduction, delay or cancellation of orders from these customers or the loss of these customers may adversely affect our business. Our business depends on international customers, suppliers and operations, and as a result we are subject to regulatory, operational, financial and political risk, which could adversely affect our financial results. The timing of our customer orders and product shipments can adversely affect our operating results and stock price If we fail to comply with or obtain waivers for covenants under our loan obligations, our financial condition could be harmed. Our failure to keep pace with technological changes would seriously harm our business. We rely heavily on a limited number of manufacturers and suppliers and the failure of any of these third-party vendors to deliver products or otherwise perform as requested could damage our relationships without our customers, decrease our sales and limit our growth. Loss of key personnel could cause our business to suffer. We rely upon patents, trademarks, copyrights and trade secrets to protect our proprietary rights and if these rights are not sufficiently protected, it could harm our ability to compete and to generate revenues. We may face intellectual property claims that could be costly to defend and result in our loss of significant rights. We will be required to expense options granted under our employee stock plan as compensation, and our net income and earnings per share could be significantly reduced and we may be forced to change our business practices to attract and retain employees. Changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected fluctuations and affect our reported results of operations. Our stock price has demonstrated volatility and overall declines, and continued volatility in the stock market may cause further fluctuations or decline in our stock price.

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790715--5/8/2006--SIGMA_DESIGNS_INC