936395--1/12/2006--CIENA

related topics

{customer, product, revenue}

{product, market, service}

{system, service, information}

{cost, operation, labor}

{tax, income, asset}

{condition, economic, financial}

{property, intellectual, protect}

{operation, international, foreign}

{personnel, key, retain}

{product, liability, claim}

Our gross margin may fluctuate from quarter to quarter and our product gross margins may be adversely affected by a number of factors, some of which are beyond our control. Our business and results of operations could continue to be adversely affected by conditions in the communications industry. We may not be successful in selling our products into new markets and developing and managing new sales channels. Network equipment sales to large communications service providers often involve a lengthy sales cycle and protracted contract negotiation. If we do not maintain and expand our sales with large communications service providers, our revenues and results of operations will suffer. We may be subject to shortages in component supply or manufacturing capacity that could increase our costs, delay our delivery of products and adversely affect our results of operations. Product performance problems could damage our business reputation and limit our sales prospects. We must continue to make substantial and prudent investments in product development in order to keep pace with technological advances and succeed in existing and new markets for our products. We may be required to take further write-downs of goodwill and other intangible assets. We may experience unanticipated delays in the development and enhancement of our products that may negatively affect our competitive position and business. We may incur significant costs and our competitive position may suffer as a result of our efforts to protect and enforce our intellectual property rights or respond to claims of infringement from others. We may be required to write off significant amounts of inventory. We must manage our relationships with EMS providers in order to ensure that our product requirements are met timely and effectively. We depend on a limited number of suppliers, and for some items we do not have a substitute supplier. Our international operations could expose us to additional risk and result in increased operating expense. Our efforts to offshore certain resources and operations to India may not be successful and may expose us to unanticipated costs or liabilities. The steps that we are taking to restructure our operations and align our resources with market opportunities could disrupt our business. Our exposure to the credit risks of our customers and resellers may make it difficult to collect receivables and could adversely affect our operating results and financial condition. If we are unable to attract and retain qualified personnel, we may be unable to manage our business effectively. Our failure to manage our service delivery partners effectively could adversely impact our financial results and relationship with customers. We may be required to assume warranty, service and other unexpected obligations in connection with our resale of complementary products of other companies.

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936395--1/12/2006--CIENA_CORP