880446--12/1/2010--VITESSE_SEMICONDUCTOR

related topics

{customer, product, revenue}

{product, market, service}

{stock, price, share}

{stock, price, operating}

{condition, economic, financial}

{control, financial, internal}

{property, intellectual, protect}

{operation, international, foreign}

{cost, regulation, environmental}

{system, service, information}

{debt, indebtedness, cash}

Risks Relating to The Company's Business The Company has experienced losses from operations and it anticipates future losses from operations. If the Company is unable to accurately predict its future sales and to appropriately budget for its expenses, its operating results could be materially and adversely affected. The Company's quarterly revenues and operating results have fluctuated in the past and may fluctuate and be difficult to predict in the future, and such fluctuations could adversely affect its stock price. The Company's operating results may be adversely impacted by economic conditions and uncertainties in the markets it addresses, including the cyclical nature of and volatility in the semiconductor industry. As a result, the market price of the Company's common stock may decline. The short life cycles of some of the Company's products may leave it with obsolete or excess inventories, which could have an adverse impact on its operating profit and net income results. The Company has limited control over the indirect channels of distribution the Company utilizes, which makes it difficult to accurately forecast orders and could result in the loss of certain sales opportunities. Order or shipment cancellations or deferrals could cause unplanned inventory growth resulting in excess inventory, which may adversely affect the Company's operating results. The Company's international sales and operations subject it to risks that could adversely affect its revenues and operating results. If the Company is unable to develop and introduce new products successfully or to achieve market acceptance of its new products, its revenues and operating results will be adversely affected. Demand for the Company's products is dependent on demand for its customers' products. Demand for the Company's products may be negatively affected if its expectations regarding market demand for particular products are not accurate. The Company is dependent on a small number of customers in a few industries for a significant amount of revenues. A decrease in sales to or the loss of, one or more significant customers could adversely impact the Company's revenues and results of operations. The Company depends on third-party wafer foundries and other suppliers and subcontract manufacturers to manufacture and test substantially all of its current products and any delays in materials or packaging, availability of manufacturing capacity, or failure to meet quality control requirements could have material adverse effects on its customer relationships, revenues, and cash flows. If the Company does not achieve satisfactory manufacturing yields or quality, its business will be harmed because of increases in its business expenses. Defects, errors, or failures in the Company's products could result in higher costs than it expects and could harm its reputation and adversely affect its revenues and level of customer satisfaction. The Company faces significant emerging and existing competition and, therefore, may not be able to maintain its market share or may be negatively impacted by competitive pricing practices. The Company must keep pace with rapid technological change and evolving industry standards in order to grow its revenues and its business. The Company's operating results may be adversely impacted by worldwide political and economic conditions and uncertainties. As a result, the market price of its common stock may decline. The Company's business is subject to environmental regulations that could increase its operating expenses. If the Company is not successful in protecting its intellectual property rights, its ability to compete or maintain market share may be harmed. The Company may be subject to claims of infringement of third-party intellectual property rights or demands that it license third-party technology, which could result in significant expense and loss of its proprietary rights. The Company is subject to United States Customs and Export Regulations Risks Relating to an Investment in The Company The Company has significant debt in the form of its Senior Term Loan and 2014 Debentures. The Company's stockholders will experience significant dilution in connection with the conversion of its Series B Preferred Stock and its 2014 Debentures. The market price for the Company's common stock has been volatile due, in part, to the Company's delisting from the NASDAQ National Market in June 2006 and future volatility could cause the value of investments in the Company to fluctuate. The holders of the 2014 Debentures have significant influence over the Company and could act in a manner with which other stockholders may disagree or that is not necessarily in the interests of other stockholders. The Company had material weaknesses in internal control over financial reporting in the recent past and the Company cannot provide assurance that additional material weaknesses will not be identified in the future.

Full 10-K form ▸

880446--12/1/2010--VITESSE_SEMICONDUCTOR_CORP