859475--8/7/2007--TRIDENT_MICROSYSTEMS

related topics

{customer, product, revenue}

{product, market, service}

{personnel, key, retain}

{financial, litigation, operation}

{property, intellectual, protect}

{stock, price, operating}

{stock, price, share}

{operation, international, foreign}

{condition, economic, financial}

{control, financial, internal}

{operation, natural, condition}

{regulation, change, law}

{system, service, information}

We have been named as a party to derivative action lawsuits, and we may be named in additional litigation, all of which will require significant management time and attention and result in significant legal expenses and may result in an unfavorable outcome which could have a material adverse effect on our business, financial condition, results of operations and cash flows. We are subject to the risks of additional lawsuits in connection with our historical stock option grant practices and related issues, the resulting restatements, and the remedial measures we have taken. The operation of our business could be adversely affected by the departure of certain executives and the search for a permanent Chief Executive Officer. We are exposed to increased costs and risks associated with complying with increasing and new regulation of corporate governance and disclosure standards. We have material weaknesses in internal control over financial reporting and cannot assure you that additional material weaknesses will not be identified in the future. If our internal control over financial reporting or disclosure controls and procedures are not effective, there may be errors in our financial statements that could require a restatement or our filings may not be timely. Due to the failure to meet continued listing standards, we may be delisted from the Nasdaq Global Market, which could adversely affect our stock price and our ability to raise capital. Our success depends upon the digital media market and we must continue to develop new products and to enhance our existing products. We depend on a small number of large customers for a significant portion of our sales. The loss of, or a significant reduction or cancellation in sales to, any key customer would significantly reduce our revenues. We currently rely on certain international customers for a substantial portion of our revenue and are subject to risks inherent in conducting business outside of the United States. Our dependence on sales to distributors increases the risks of managing our supply chain and may result in excess inventory or inventory shortages. The cyclical nature of the semiconductor industry may lead to significant variances in the demand for our products. Intense competition exists in the market for digital media products. The average selling prices of our products may decline over relatively short periods. We do not have long-term commitments from our customers, and plan purchases based upon our estimates of customer demand, which may require us to contract for the manufacture of our products based on inaccurate estimates. If we do not achieve additional design wins in the future, our ability to sell additional products could be adversely affected. We have had fluctuations in quarterly results in the past and may continue to experience such fluctuations in the future. We are vulnerable to undetected product problems. Our reliance upon independent foundries could make it difficult to maintain product flow and affect our sales. If we have to qualify a new contract manufacturer or foundry for any of our products, we may experience delays that result in lost revenues and damaged customer relationships. The market price of our common stock has been, and may continue to be volatile. Our success depends to a significant degree on the continued employment of key personnel. Our success depends in part on our ability to protect our intellectual property rights, which may be difficult. We have been involved in intellectual property infringement claims, and may be involved in others in the future, which can be costly. Our operations are vulnerable to interruption or loss due to natural disasters, power loss, strikes and other events beyond our control, which would adversely affect our business

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859475--8/7/2007--TRIDENT_MICROSYSTEMS_INC