859475--9/11/2009--TRIDENT_MICROSYSTEMS

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{customer, product, revenue}

{product, market, service}

{financial, litigation, operation}

{property, intellectual, protect}

{personnel, key, retain}

{condition, economic, financial}

{stock, price, operating}

{cost, operation, labor}

{regulation, change, law}

{tax, income, asset}

{provision, law, control}

{system, service, information}

{stock, price, share}

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{product, candidate, development}

Our success depends to a significant degree on the continued employment of key personnel, some of whom have only worked together for a short period of time, as well as upon our ability to retain and motivate key employees joining us from Micronas, and failure to do so could seriously harm our financial results and operations. As a result of the Purchase, we are a larger and more geographically diverse organization, and if we are unable to manage this larger organization efficiently, our operating results will suffer. We have incurred significant costs associated with the Purchase. The issuance of shares of Trident common stock to Micronas in the Purchase has reduced the percentage interests of current Trident stockholders. As a result of the difficult global macroeconomic and industry conditions, we have implemented a restructuring and workforce reductions, and may be required to make additional such reductions, which may adversely affect the morale and performance of our personnel and our ability to hire new personnel. We depend on a small number of large customers for a significant portion of our sales. The loss of, a significant reduction in or cancellation of sales to any key customer would significantly reduce our revenues. If we engage in further cost-cutting or workforce reductions, we may be unable to successfully implement new products or enhancements or upgrades to our products. A decline in revenues may have a disproportionate impact on operating results and require further reductions in our operating expense levels. The impact of changes in global economic conditions on our current and potential customers may adversely affect our revenues and results of operations. As a result of our investigation into our historical stock option granting practices and the restatement of our previously filed financial statements, we are subject to civil litigation claims and regulatory investigations that could have a material adverse effect on our business, customer relationships, results of operations and financial condition We face risks related to SEC, DOJ, and other investigations into our historical stock option grant practices and related accounting, which could require significant management time and attention, and could require us to pay fines or other penalties. 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 transition of key personnel as we rebuild our executive leadership team and make additional organizational changes. Intense competition exists in the market for digital media products. Our success depends upon the digital media market and we must continue to develop new products and to enhance our existing products. If we do not achieve additional design wins in the future, our ability to sell additional products could be adversely affected. The average selling prices of our products may decline over relatively short periods. We may be required to record future charges to earnings if our intangible assets become impaired. We may face risks resulting from the failure to allow former employees to exercise stock options. 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. Our dependence on sales to distributors increases the risks of managing our supply chain and may result in excess inventory or inventory shortages. Product supply and demand in the semiconductor industry is subject to cyclical variations. 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 a very small number of foundries could make it difficult to maintain product flow and affect our sales. If we have to qualify new contract manufacturers or foundries for any of our products, we may experience delays that result in lost revenues and damaged customer relationships. 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. If necessary licenses of third-party technology are not available to us or are very expensive, our products could become obsolete. Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates. Changes in our business and product strategy could affect our operations. The market price of our common stock has been, and may continue to be, volatile.

Full 10-K form ▸

859475--9/11/2009--TRIDENT_MICROSYSTEMS_INC