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0000320193
20120725
10-Q
619
Such a perception could discourage resellers from investing resources in the distribution and sale of the Company’s products or lead them to limit or cease distribution of those products.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
620
The Company has invested and will continue to invest in programs to enhance reseller sales, including staffing selected resellers’ stores with Company employees and contractors and improving product placement displays.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
621
These programs could require a substantial investment while providing no assurance of return or incremental revenue.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
622
The financial condition of these resellers could weaken, these resellers could stop distributing the Company’s products, or uncertainty regarding demand for the Company’s products could cause resellers to reduce their ordering and marketing of the Company’s products.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
623
The Company’s Retail segment has required and will continue to require a substantial investment and commitment of resources and is subject to numerous risks and uncertainties.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
624
The Company’s retail stores have required substantial fixed investment in equipment and leasehold improvements, information systems, inventory and personnel.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
625
The Company also has entered into substantial operating lease commitments for retail space.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
626
Certain stores have been designed and built to serve as high-profile venues to promote brand awareness and serve as vehicles for corporate sales and marketing activities.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
627
Because of their unique design elements, locations and size, these high-profile stores require substantially more investment than the Company’s more typical retail stores.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
628
Due to the high fixed cost structure associated with the Retail segment, a decline in sales or the closure or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements, and severance costs.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
629
Many factors unique to retail operations, some of which are beyond the Company’s control, pose risks and uncertainties.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
630
These risks and uncertainties include, but are not limited to, macro-economic factors that could have an adverse effect on general retail activity, as well as the Company’s inability to manage costs associated with store construction and operation, inability to sell third-party products at adequate margins, failure to ...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
631
Investment in new business strategies and acquisitions could disrupt the Company’s ongoing business and present risks not originally contemplated.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
632
The Company has invested, and in the future may invest, in new business strategies or acquisitions.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
633
Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, insufficient revenue to offset liabilities assumed and expenses associated with the strategy, inadequate return of capital, and unidentified issues not discovered in the Company’s due diligence.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
634
These new ventures are inherently risky and may not be successful.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
635
The Company’s products and services may experience quality problems from time-to-time that can result in decreased sales and operating margin.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
636
The Company sells complex hardware and software products and services that can contain design and manufacturing defects.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
637
Sophisticated operating system software and applications, such as those sold by the Company, often contain “bugs” that can unexpectedly interfere with the software’s intended operation.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
638
The Company’s online services may from time-to-time experience outages, service slowdowns, or errors.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
639
Defects may also occur in components and products the Company purchases from third parties.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
640
There can be no assurance the Company will be able to detect and fix all defects in the hardware, software and services it sells.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
641
Failure to do so could result in lost revenue, significant warranty and other expenses, and harm to the Company’s reputation.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
642
The Company is subject to laws and regulations worldwide, changes to which could increase the Company’s costs and individually or in the aggregate adversely affect the Company’s business.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
643
The Company is subject to laws and regulations affecting its domestic and international operations in a number of areas.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
644
These U.S. and foreign laws and regulations affect the Company’s activities including, but not limited to, areas of labor, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual p...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
645
By way of example, laws and regulations related to mobile communications and media devices in the many jurisdictions in which the Company operates are extensive and subject to change.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
646
Such changes could include, among others, restrictions on the production, manufacture, distribution, and use of the device, locking the device to a carrier’s network, or mandating the use of the device on more than one carrier’s network.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
647
These devices are also subject to certification and regulation by governmental and standardization bodies, as well as by cellular network carriers for use on their networks.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
648
These certification processes are extensive and time consuming, and could result in additional testing requirements, product modifications, delays in product shipment dates, or preclude the Company from selling certain products.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
649
Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
650
This increases the costs of doing business, and any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation could individually or in the aggregate make the Company’s products and services less attractive to the Company’s customers, delay the introduction ...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
651
The Company has implemented policies and procedures designed to ensure compliance with these laws and regulations, but there can be no assurance that the Company’s employees, contractors, or agents will not violate such laws and regulations or the Company’s policies.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
652
The Company’s success depends largely on the continued service and availability of key personnel.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
653
Much of the Company’s future success depends on the continued availability and service of key personnel, including its Chief Executive Officer, executive team and highly skilled employees.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
654
Experienced personnel in the technology industry are in high demand and competition for their talents is intense, especially in the Silicon Valley, where most of the Company’s key personnel are located.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
655
The Company’s business may be impacted by political events, war, terrorism, public health issues, natural disasters and other circumstances.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
656
War, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a material adverse effect on the Company, its suppliers, logistics providers, manufacturing vendors an...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
657
The Company’s business operations are subject to interruption by natural disasters, fire, power shortages, nuclear power plant accidents, terrorist attacks, and other hostile acts, labor disputes, public health issues, and other events beyond its control.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
658
Such events could decrease demand for the Company’s products, make it difficult or impossible for the Company to make and deliver products to its customers, including channel partners, or to receive components from its suppliers, and create delays and inefficiencies in the Company’s supply chain.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
659
Should major public health issues, including pandemics, arise, the Company could be adversely affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, delays in production ramps of new products, and disru...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
660
The majority of the Company’s research and development activities, its corporate headquarters, information technology systems, and other critical business operations, including certain component suppliers and manufacturing vendors, are in locations that could be affected by natural disasters.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
661
In the event of a natural disaster, losses, significant recovery time and substantial expenditures could be required to resume operations.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
662
The Company’s business and reputation may be impacted by information technology system failures or network disruptions.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
663
The Company may be subject to information technology system failures and network disruptions.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
664
These may be caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or similar events or disruptions.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
665
System redundancy may be ineffective or inadequate, and the Company’s disaster recovery planning may not be sufficient for all eventualities.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
666
Such failures or disruptions could prevent access to the Company’s online stores and services, preclude retail store transactions, compromise Company or customer data, and result in delayed or cancelled orders.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
667
System failures and disruptions could also impede the manufacturing and shipping of products, delivery of online services, transactions processing and financial reporting.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
668
The Company may be subject to breaches of its information technology systems, which could damage business partner and customer relationships, curtail or otherwise adversely impact access to online stores and services, and could subject the Company to significant reputational, financial, legal, and operational consequen...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
669
The Company’s business requires it to use and store customer, employee, and business partner personally identifiable information (“PII”).
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
670
This may include names, addresses, phone numbers, email addresses, contact preferences, tax identification numbers, and payment account information.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
671
Although malicious attacks to gain access to PII affect many companies across various industries, the Company may be at a relatively greater risk of being targeted because of its high profile and the amount of PII managed.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
672
The Company requires user names and passwords in order to access its information technology systems.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
673
The Company also uses encryption and authentication technologies to secure the transmission and storage of data.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
674
These security measures may be compromised as a result of third-party security breaches, employee error, malfeasance, faulty password management, or other irregularity, and result in persons obtaining unauthorized access to Company data or accounts.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
675
Third parties may attempt to fraudulently induce employees or customers into disclosing user names, passwords or other sensitive information, which may in turn be used to access the Company’s information technology systems.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
676
To help protect customers and the Company, the Company monitors accounts and systems for unusual activity and may freeze accounts under suspicious circumstances, which may result in the delay or loss of customer orders.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
677
The Company devotes significant resources to network security, data encryption, and other security measures to protect its systems and data, but these security measures cannot provide absolute security.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
678
The Company may experience a breach of its systems and may be unable to protect sensitive data.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
679
Moreover, if a computer security breach affects the Company’s systems or results in the unauthorized release of PII, the Company’s reputation and brand could be materially damaged and use of the Company’s products and services could decrease.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
680
The Company would also be exposed to a risk of loss or litigation and possible liability.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
681
The Company’s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
682
The Company is subject to federal, state and international laws relating to the collection, use, retention, security and transfer of PII.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
683
In many cases, these laws apply not only to third-party transactions, but also to transfers of information between the Company and its subsidiaries, and among the Company, its subsidiaries and other parties with which the Company has commercial relations.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
684
Several jurisdictions have passed new laws in this area, and other jurisdictions are considering imposing additional restrictions.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
685
These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
686
Complying with emerging and changing international requirements may cause the Company to incur substantial costs or require the Company to change its business practices.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
687
Noncompliance could result in penalties or significant legal liability.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
688
The Company’s privacy policy and related practices concerning the use and disclosure of data are posted on its website.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
689
Any failure by the Company, its suppliers or other parties with whom the Company does business to comply with its posted privacy policy or with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against the Company by governmental entities or others...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
690
The Company is also subject to payment card association rules and obligations under its contracts with payment card processors.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
691
Under these rules and obligations, if information is compromised, the Company could be liable to payment card issuers for the cost of associated expenses and penalties.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
692
In addition, if the Company fails to follow payment card industry security standards, even if no customer information is compromised, the Company could incur significant fines or experience a significant increase in payment card transaction costs.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
693
The Company expects its quarterly revenue and operating results to fluctuate.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
694
The Company’s profit margins vary among its products and its distribution channels.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
695
The Company’s software, accessories, and service and support contracts generally have higher gross margins than certain of the Company’s other products.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
696
Gross margins on the Company’s hardware products vary across product lines and can change over time as a result of product transitions, pricing and configuration changes, and component, warranty, and other cost fluctuations.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
697
The Company’s direct sales generally have higher associated gross margins than its indirect sales through its channel partners.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
698
In addition, the Company’s gross margin and operating margin percentages, as well as overall profitability, may be materially adversely impacted as a result of a shift in product, geographic or channel mix, new products, component cost increases, strengthening U.S. dollar, or price competition.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
699
The Company has typically experienced greater net sales in the first fiscal quarter compared to other fiscal quarters due to increased holiday seasonal demand.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
700
The Company could be subject to unexpected developments late in a quarter, such as lower-than-anticipated demand for the Company’s products, issues with new product introductions, an internal systems failure, or failure of one of the Company’s logistics, components supply, or manufacturing partners.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
701
The Company’s stock price is subject to volatility.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
702
The Company’s stock continues to experience substantial price volatility.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
703
Additionally, the Company, the technology industry, and the stock market as a whole have experienced extreme price and volume fluctuations that have affected stock prices in ways that may have been unrelated to these companies’ operating performance.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
704
The Company believes its stock price reflects high future growth and profitability expectations.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
705
If the Company fails to meet these expectations its stock price may significantly decline, which could have a material adverse impact on investor confidence and employee retention.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
706
The Company’s business is subject to the risks of international operations.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
707
The Company derives a significant portion of its revenue and earnings from its international operations.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
708
Compliance with applicable U.S. and foreign laws and regulations, such as import and export requirements, anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy requirements, environmental laws, labor laws, and anti-competition regulations, increases the costs of doin...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
709
Although the Company has implemented policies and procedures to comply with these laws and regulations, a violation by the Company’s employees, contractors, or agents could nevertheless occur.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
710
The Company also could be significantly affected by other risks associated with international activities including, but not limited to, economic and labor conditions, increased duties, taxes and other costs, political instability, and changes in the value of the U.S. dollar versus local currencies.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
711
Margins on sales of the Company’s products in foreign countries, and on sales of products that include components obtained from foreign suppliers, could be materially adversely affected by foreign currency exchange rate fluctuations and by international trade regulations, including duties, tariffs and antidumping penal...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
712
The Company is also exposed to credit and collectability risk on its trade receivables with customers in certain international markets.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
713
There can be no assurance the Company can effectively limit its credit risk and avoid losses.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
714
The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses worldwide.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
715
For example, the uncertainty regarding the ability of certain European countries to continue to service their sovereign debt obligations and the related financial restructuring efforts by European governments may cause the value of several European currencies, including the euro to fluctuate, which could adversely affe...
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
716
Weakening of foreign currencies relative to the U.S. dollar will adversely affect the U.S. dollar value of the Company’s foreign currency-denominated sales and earnings, and generally will lead the Company to raise international pricing, potentially reducing demand for the Company’s products.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
717
In some circumstances, due to competition or other reasons, the Company may decide not to raise local prices to the full extent of the dollar’s strengthening, or at all, which would adversely affect the U.S. dollar value of the Company’s foreign currency denominated sales and earnings.
0001193125-12-314552/full-submission.txt
0000320193
20120725
10-Q
718
Conversely, a strengthening of foreign currencies, while generally beneficial to the Company’s foreign currency-denominated sales and earnings, could cause the Company to reduce international pricing and incur losses on its foreign currency derivative instruments, thereby limiting the benefit.
0001193125-12-314552/full-submission.txt