by other manufacturers. Technology transition for head and magnetic media designs is critical to increasing our vol-
ume production of heads and magnetic media. There can be no assurance, however, that we will be successful in
timely and cost-effectively developing and manufacturing heads or magnetic media for products using future tech-
nologies. We also may not effectively transition our head or magnetic media design and technology to achieve accept-
able manufacturing yields using the technologies necessary to satisfy our customers' product needs, or we may
encounter quality problems with the heads or magnetic media we manufacture. If we are unable to timely and cost-
effectively develop heads and magnetic media with leading technology and overall quality, our ability to sell our
products may be significantly diminished, which could materially and adversely affect our business and financial
results.
our overall level of production decreases for any reason, and we are unable to reduce our fixed costs to match sales, our
head or magnetic media manufacturing assets may face under-utilization that may impact our operating results. We
are therefore subject to additional risks related to overall asset utilization, including the need to operate at high levels
of utilization to drive competitive costs and the need for assured supply of components that we do not manufacture
ourselves. If we do not adequately address the challenges related to our head or magnetic media manufacturing oper-
ations, our ongoing operations could be disrupted, resulting in a decrease in our revenue or profit margins and neg-
atively impacting our operating results.
unsuccessful investments could materially adversely affect our business, financial condition and results of operations.
strategy requires us to make significant investments in research and development and, in attempting to remain com-
petitive, we may increase our capital expenditures and expenses above our historical run-rate model. There can be no
assurance that these investments will result in viable technologies or products, or if these investments do result in
viable technologies or products, that they will be profitable or accepted by the market. Significant investments in
unsuccessful research and development efforts could materially adversely affect our business, financial condition and
results of operations. In addition, increased investments in technology could cause our cost structure to fall out of
alignment with demand for our products, which would have a negative impact on our financial results.
advantage over the products and services that we offer. Advantages could be in capacity, performance, reliability, serv-
iceability, or other attributes. A competitive cost structure for our products, including critical components, labor and
overhead, is also critical to the success of our business. We may be at a competitive disadvantage to any companies
that are able to gain a technological or cost structure advantage.
solidation by our competitors may enhance their capacity, abilities and resources and lower their cost structure, caus-
ing us to be at a competitive disadvantage.
prices that we cannot profitably match.