835541--11/8/2006--SOLECTRON

related topics

{customer, product, revenue}

{cost, operation, labor}

{operation, international, foreign}

{property, intellectual, protect}

{product, liability, claim}

{acquisition, growth, future}

{cost, regulation, environmental}

{capital, credit, financial}

{system, service, information}

{personnel, key, retain}

{control, financial, internal}

{stock, price, operating}

{tax, income, asset}

Most of our sales come from a small number of customers; if we lose any of these customers, our net sales could decline significantly. Our customers may cancel their orders, change production quantities or locations, or delay production. Our business has low operating margins and any increase in cost of sales or operating expenses could have a material adverse effect on our profitability. We may not be able to sell excess or obsolete inventory to customers or third parties, which could have a material adverse impact on our consolidated financial condition. We are exposed to risks associated with operating internationally. Possible fluctuation of operating results from quarter to quarter and factors out of our control could affect the market price of our securities. If we incur more restructuring-related charges than currently anticipated, our consolidated financial condition and results of operations may suffer. Failure to attract and retain key personnel and skilled associates could hurt our operations. We depend on limited or sole source suppliers for critical components. The inability to obtain sufficient components as required, and under favorable purchase terms, would harm our business. We potentially bear the risk of price increases associated with shortages in electronics components. Our net sales could decline if our competitors provide comparable manufacturing services and improved products at a lower cost. We depend on the continuing trend of OEMs to outsource. Our strategic relationships with major customers create risks. Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses. If we are unable to manage future acquisitions, and cost-effectively run our operations, our profitability could be adversely affected. If we have a material weakness in our internal controls over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our securities. If our products are subject to warranty or liability claims, we may incur significant costs. We may not have sufficient insurance coverage for certain of the risks and liabilities we assume in connection with the products and services we provide to our customers. Our design and engineering services may result in additional exposure to product liability, intellectual property infringement and other claims. Notwithstanding our divestiture of certain businesses in recent years, we remain subject to certain indemnification obligations for a period of time after completion of the divestitures. We are exposed to fluctuations in foreign currency exchange rates and interest rate fluctuations. Failure to comply with environmental regulations could harm our business. Our ongoing implementation of new enterprise resource planning (ERP) software and systems may cause disruptions in our business operations. We may not be able to adequately protect or enforce our intellectual property rights and could become involved in intellectual property disputes. Rating downgrades may make it more expensive for us to borrow money. Unanticipated changes in our tax rates or in our exposure to additional tax liabilities could affect our operating results and financial condition.

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835541--11/8/2006--SOLECTRON_CORP