926282--2/26/2010--ADTRAN

related topics

{customer, product, revenue}

{product, market, service}

{cost, regulation, environmental}

{operation, international, foreign}

{stock, price, operating}

{system, service, information}

{regulation, government, change}

{control, financial, internal}

{product, candidate, development}

{property, intellectual, protect}

{personnel, key, retain}

{tax, income, asset}

{acquisition, growth, future}

{capital, credit, financial}

{gas, price, oil}

{condition, economic, financial}

Our operating results may fluctuate in future periods, which may adversely affect our stock price. Our revenue for a particular period can be difficult to predict, and a shortfall in revenue may harm our operating results. General economic conditions may reduce our revenues and harm our operating results. Our exposure to the credit risks of our customers and distributors may make it difficult to collect accounts receivable and could adversely affect our operating results and financial condition. We expect gross margin to vary over time, and our level of product gross margin may not be sustainable. We must continue to update and improve our products and develop new products in order to compete and to keep pace with improvements in telecommunications technology. Our products may not continue to comply with the regulations governing their sale, which may harm our business. Our failure or the failure of our contract manufacturers to comply with applicable environmental regulations could adversely impact our results of operations. If our products do not interoperate with our customers networks, installations may be delayed or cancelled, which could harm our business. The lengthy approval process required by ILECs and other service providers for new products could result in fluctuations in our revenue. We engage in research and development activities to improve the application of developed technologies, and as a consequence may miss certain market opportunities enjoyed by larger companies with substantially greater research and development efforts who may focus on more leading edge development. We depend heavily on sales to certain customers; the loss of any of these customers would significantly reduce our revenues and net income. Our strategy of outsourcing a portion of our manufacturing requirements to subcontractors located in Asia may result in us not meeting our cost, quality or performance standards. Our dependence on a limited number of suppliers may prevent us from delivering our products on a timely basis, which could have a material adverse effect on customer relations and operating results. We compete in markets that have become increasingly competitive, which may result in reduced gross profit margins and market share. Our estimates regarding future warranty obligations may change due to product failure rates, shipment volumes, field service obligations and other rework costs incurred in correcting product failures. If our estimates change, the liability for warranty obligations may be increased or decreased, impacting future cost of goods sold. Managing our inventory is complex and may include write-downs of excess or obsolete inventory. We may pursue acquisitions, which may expose us to a number of risks. If we are unable to mitigate these risks, our business may be negatively impacted. Increased sales volume in international markets could result in increased costs or loss of revenue due to factors inherent in these markets. We may be adversely affected by fluctuations in currency exchange rates. Our success depends on our ability to reduce the selling prices of succeeding generations of our products. Our failure to maintain rights to intellectual property used in our business could adversely affect the development, functionality, and commercial value of our products. Software under license from third parties for use in certain of our products may not continue to be available to us on commercially reasonable terms. We may incur liabilities or become subject to litigation that would have a material effect on our business. Consolidation and deterioration in the competitive service provider market could result in a significant decrease in our revenue. We depend on distributors who maintain inventories of our products. If the distributors reduce their inventories of these products, our sales could be adversely affected. If we are unable to successfully develop relationships with system integrators, service providers, and enterprise value added resellers, our sales may be negatively affected. If we fail to manage our exposure to worldwide financial and securities markets successfully, our operating results and financial statements could be materially impacted. Changes in our effective tax rate or assessments arising from tax audits may have an adverse impact on our results. Our success depends on attracting and retaining key personnel. Regulatory and potential physical impacts of climate change may affect our customers and our production operations, resulting in adverse affects on our operating results. While we believe our internal control over financial reporting is adequate, a failure to maintain effective internal control over financial reporting as our business expands could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price. The price of our common stock has been volatile and may continue to fluctuate significantly.

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926282--2/26/2010--ADTRAN_INC