What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-02-05 compared with 2020-11-06 · 92 added, 46 removed, 691 unchanged (17% of the section changed)

3 unchanged sentences

If any event related to these known or unknown risks or uncertainties actually occurs, our business prospects, operating results, and financial condition could be materially adversely affected.

Risk Factors Summary

• our limited ability to forecast our results of operations and sales;

• volatility and competition in the markets we serve or our inability to compete effectively with our competitors;

• our reliance on a limited number of distributors for our products and the inability of our distributors to manage inventory of our products effectively, timely sell our products or estimate future demand for our products;

• our inventory decisions, including, without limitation, for new product introductions, are based on assumptions and forecasts, which, if inaccurate, may result in write-downs of inventory or components;

• our inability to keep pace with rapid technological and market changes or to maintain competitive prices for products;

• the technological complexity of our products, which may contain undetected hardware defects or software bugs;

• our inability to anticipate or mitigate cyberattacks, security vulnerabilities or other fraudulent or illegal activity;

• our inability to manage our growth and expand our operations;

• our inability to maintain or enhance the strength of our brand;

• our reliance on a limited number of contract manufacturers to manufacture our products, and potential quality or product supply problems for our products if we are unable to secure sufficient components for our products or there is a shortage of manufacturing capacity;

• our reliance on a limited number of suppliers and our inability to predict shortages in components or other supply disruptions, including, without limitations, as a result of COVID-19, or to identify or qualify alternative suppliers;

• disruption to the manufacturing or shipping of our products due to natural disasters, labor shortages or operational reductions from outbreaks of diseases or other public health events, including, without limitation, COVID-19, or similar disruptions in the countries or regions in which our contract manufacturers or logistics contractors are located;

• a global economic downturn;

• lower than expected returns from our investments in growth areas or our enterprise and service provider technologies;

• the ineffective management of product introductions, product transitions and marketing or our inability to remain competitive and stimulate customer demand for our products;

• our inability to anticipate consumer preferences and develop desirable consumer products and solutions, or to execute our strategy for our consumer products or develop our sales channels;

• general credit, liquidity, market, and interest rate risks to our investment securities;

• exposure to increased economic and operational uncertainties from our international operations, including, without limitation, as a result of foreign policy and geopolitical developments, varying legal and regulatory regimes and the effects of foreign currency exchange rates;

• the failure of our foreign warehouse and logistics providers to safeguard, manage and properly report our inventory;

• exposure to increased operational risks and liability to the extent we develop our own foreign manufacturing capacity;

• our inability to manage geographically dispersed research and development teams;

• our limited ability to obtain and enforce our intellectual property rights, particularly in China and South America;

• the misappropriation of our intellectual property and trade secrets by our contract manufacturers or others to manufacture competitive products or counterfeit products;

• our exposure to extensive intellectual property litigation;

• the risks of using open source software in our products;

• our debt levels and the impact our debt levels may have on our ability to raise capital or otherwise finance our business;

• the risks of expanding our product offerings or our operations or increases in our operating expenses;

• exposure to increased operational risks associated with our investments in new businesses, products, services, technologies, joint ventures and other strategic transactions;

• our reliance on third-party software and services for certain aspects of our operations, including, without limitation, our financial reporting functions;

• our inability to integrate future acquisitions;

• changes in LIBOR reporting practices and the index used to replace LIBOR;

• our reliance on our founder and chief executive officer, who owns a majority of our common stock;

• volatility in the price of our common stock due to volatility in our results of operations or our failure to pay cash dividends or to repurchase shares of our common stock pursuant to our repurchase programs;

• the reliance of our products on unlicensed radio frequency spectrum, and the increasing reliance of consumer and other products on the same spectrum or from the introduction of regulation of such spectrum;

• potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;

• changes in laws and regulations relating to the handling of personal data;

• the adverse impact from litigation matters;

• the adverse impact to our results of operations from successful warranty claims, product losses or recalls;

• indemnification claims against us for intellectual property infringement, defective products, and security vulnerabilities;

• our inability to maintain an effective system of internal controls;

• changes in tax laws and regulations or reviews or audits of our tax returns.

Risks Related to Our Business and Industry

10 unchanged sentences

The markets we serve can be especially volatile, and weakness in orders could harm our future results of operations.

regulatory uncertainty), could have a material adverse effect on our business, results of operations, liquidity and financial condition.

Weakness in orders, directly or indirectly, from the markets we serve, including as a result of any slowdown in capital expenditures by the markets we service (which may be more prevalent during a global economic downturn, or periods of economic, political or regulatory uncertainty), could have a material adverse effect on our business, results of operations, liquidity and financial condition.

Such slowdowns may continue or recur in future periods.

20 unchanged sentences

Any distributor may also cease doing business with us at any time with little or no notice.

The termination of a relationship with a major distributor, either by us or by the distributor, could result in a temporary or permanent loss of revenues, slower or impaired collection on accounts receivable and costly and time-consuming litigation or arbitration.

termination of a relationship with a major distributor, either by us or by the distributor, could result in a temporary or permanent loss of revenues, slower or impaired collection on accounts receivable and costly and time-consuming litigation or arbitration.

We may not be successful in finding other suitable distributors on satisfactory terms, or at all, and this could adversely affect our ability to sell in certain geographic markets or to certain network operators and service providers.

2 unchanged sentences

The market for our wireless broadband networking equipment is emerging and is characterized by rapid technological change, evolving industry standards, frequent new product introductions and short product life cycles.

The markets for enterprise networking equipment and consumer products possess similar characteristics of rapid technological updates, evolving industry standards, frequent

changes in consumer preferences, frequent new product introductions and short and unpredictable product life cycles.

The markets for enterprise networking equipment and consumer products possess similar characteristics of rapid technological updates, evolving industry standards, frequent changes in consumer preferences, frequent new product introductions and short and unpredictable product life cycles.

Our ability to keep pace in these markets depends upon our ability to enhance our current products, and continue to develop and introduce new products rapidly and at competitive prices.

26 unchanged sentences

Potential customers may prefer to purchase from their existing suppliers or well-known brands rather than a new supplier, regardless of product performance or features.

We expect increased competition from other established and emerging companies if our market continues to develop and expand.

We expect increased competition from other established and emerging companies if our

market continues to develop and expand.

As we enter new markets, we expect to face competition from incumbent and new market participants and there is no assurance that our entry into new markets will be successful.

8 unchanged sentences

We have in the past experienced, and may in the future experience, defects and bugs.

If any of our products contain material defects or bugs, or has reliability, quality or compatibility problems, we may not be able to promptly or successfully correct these problems.

If any of our products contain material defects or bugs, or has reliability, quality or compatibility problems, we may not be able to correct these problems promptly or successfully.

The existence of defects or bugs in our products may damage our reputation and disrupt our sales.

10 unchanged sentences

We have experienced cyber-attacks in the past, and may experience cyber-attacks in the future.

As a result, unauthorized parties may have obtained, and may in the future obtain, access to our systems, data or our users’ or customers’ data.

As a result, unauthorized parties have obtained, and may in the future obtain, access to our systems and data and may have obtained, and may in the future obtain, our users’ or customers’ data.

Our security measures may also be breached due to employee error, malfeasance, or otherwise.

2 unchanged sentences

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

For example, in January 2021, we became aware that certain of our information technology systems hosted by a third party cloud provider were improperly accessed and certain of our source code and the credentials used to access the information technology systems themselves had been compromised.

We received a threat to publicly release these materials unless we made a payment, which we have not done.

As a result, it is possible that the source code and other information could be publicly disclosed or made available to our competitors.

Due to the nature of the source code and the other information that we believe was improperly accessed, we at this time do not believe that any public disclosure will have a material adverse effect on our business or operations, but it is impossible to gauge the precise impact of any such disclosure.

We have taken, and will continue to take, steps to remediate access controls to our information technology systems .

The costs to us to eliminate or alleviate security vulnerabilities can be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions, as well as potential liability to the company.

70 unchanged sentences

Any disruption resulting from these events could cause significant delays in product development or shipments of our products until we are able to shift our development, manufacturing or logistics centers from the affected contractor to another vendor, or shift the affected administrative or research and development activities to another location.

Our business may be materially adversely affected by public health problems, particularly

Our business may be materially adversely affected by public health problems, particularly in China.

For example, in the last decade, China has suffered health crises related to the outbreak of avian influenza, severe acute respiratory syndrome and COVID-19.

2 unchanged sentences

Public health problems may also result in quarantines, business closures, unavailability of key personnel, domestic and international transportation restrictions, import and export complications, and otherwise cause shortages in the supply of components or cause other disruptions within our supply chain.

Public health problems currently cause and may continue to cause disruptions, delays, shortages, and increased costs within our supply chain, and distribution channels.

Public health problems currently cause and may continue

to cause disruptions, delays, shortages, and increased costs within our supply chain, and distribution channels.

In addition, public health problems may require us to take precautionary measures to minimize the risk to our employees, including requiring our employees to work remotely and suspending non-essential travel, which could negatively affect our business.

16 unchanged sentences

Under the Withdrawal Agreement, a “transition period” will come into force for eleven months, from February 1, 2020 until December 31, 2020.

Although the Withdrawal Agreement ensures that a “ no-deal ” or “cliff-edge” Brexit was avoided on January 31, 2020, there is no certainty that a similar effect will be avoided at the end of 2020.

This could continue to cause disruptions in the markets that we serve.

On January 1, 2021, the United Kingdom left the European Union.

On December 24, 2020, the European Commission reached a trade agreement with the United Kingdom on the terms of its future cooperation with the European Union, subject to final approval by the European Parliament.

The most significant impact of the new trade agreement are new regulations regarding trade, tax, and employees, among others, in the United Kingdom.

Brexit could continue to cause disruptions in the markets that we serve.

Additionally, we may be adversely affected by the Brexit in ways we do not currently anticipate.

6 unchanged sentences

An economic downturn or economic uncertainty in our key U.S.

and international markets, as well as fluctuations in currency

exchange rates, may adversely affect consumer discretionary spending and demand for our consumer products.

and international markets, as well as fluctuations in currency exchange rates, may adversely affect consumer discretionary spending and demand for our consumer products.

Factors affecting the level of consumer spending include general market conditions, macroeconomic conditions, fluctuations in foreign exchange rates and interest rates, and other factors such as consumer confidence, the availability and cost of consumer credit, levels of unemployment and tax rates.

11 unchanged sentences

Therefore, we may not correctly determine in advance the ultimate effect of new product introductions and transitions.

Additionally, if the assumptions on which we based our forecasts and management of product demand, purchase commitments or inventory levels turn out to be incorrect, our financial performance could suffer and we could be required to write-off the value of

excess products or components inventory or not fully utilize firm purchase commitments.

In addition, the introduction or announcement of new products or product enhancements may shorten the life cycle of our existing products or reduce demand for our current products, thereby offsetting any benefits of successful product introductions and potentially lead to challenges in managing inventory of existing products.

147 unchanged sentences

These factors may make it more challenging for us to enforce our intellectual property rights against infringement.

The infringement of our intellectual property rights, particularly in these jurisdictions, may materially harm our

business in these markets and elsewhere by reducing our sales, and adversely affecting our results of operations, and diluting our brand or reputation.

The infringement of our intellectual property rights, particularly in these jurisdictions, may materially harm our business in these markets and elsewhere by reducing our sales, and adversely affecting our results of operations, and diluting our brand or reputation.

Our contract manufacturers may not respect our intellectual property, and may produce products that compete with ours.

30 unchanged sentences

• require us to cease offering certain of our products or services.

Some of our competitors may have substantially greater resources than we do and may be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could.

In addition, patent holding companies and other third-party non-practicing entities that focus on extracting royalties and settlements by enforcing patent rights may target our

component suppliers, manufacturers, us, our distributors, members of our sales channels, our network operators and service providers, or other purchasers of our products.

Some of our competitors may have substantially greater resources than we do and may be able to sustain the costs of complex

intellectual property litigation to a greater degree and for longer periods of time than we could.

In addition, patent holding companies and other third-party non-practicing entities that focus on extracting royalties and settlements by enforcing patent rights may target our component suppliers, manufacturers, us, our distributors, members of our sales channels, our network operators and service providers, or other purchasers of our products.

These companies typically have little or no product revenues and therefore our patents may provide little or no deterrence against such companies filing patent infringement lawsuits against our component suppliers, manufacturers, us, our distributors, members of our sales channels, network operators and service providers, or other purchasers of our products.

59 unchanged sentences

We rely on third party service providers, such as G-Suite, Google Cloud and Amazon Web Services, to provide distributed computing infrastructure platforms for business operations, or what is commonly referred to as a “cloud” computing service.

Any transition of the

cloud services currently provided by these service providers to another cloud provider would be difficult to implement and will cause us to incur significant time and expense.

Any transition of the cloud services currently provided by these service providers to another cloud provider would be difficult to implement and will cause us to incur significant time and expense.

If our existing cloud service providers experience interruptions in service regularly or for a prolonged basis, or other similar issues, our business would be seriously harmed.

3 unchanged sentences

Our debt levels could adversely affect our ability to raise additional capital to pay dividends, repurchase our shares of common stock and fund our operations or limit our ability to react to changes in our industry or the economy.

As of September 30, 2020, our balance outstanding under the Credit Agreement for our Term Facility and Revolving Facility, was $468.8 million and $170.0 million, respectively.

As of December 31, 2020, our balance outstanding under the Credit Agreement for our Term Facility and Revolving Facility, was $462.5 million and $145.0 million, respectively.

In the future we may need to raise additional capital to finance our payment of dividends or repurchase shares of our common stock and fund our growth and operational goals.

If additional financing is not available when required or on acceptable terms, we may not be able to pay dividends, repurchase shares of common stock, expand our business, develop or enhance our products, take advantage of business opportunities or respond to competitive pressures, which could result in lower revenues and reduce the competitiveness of our products.

If additional financing is not available when required or on acceptable terms, we may not be able to pay dividends, repurchase shares of common stock, expand our

business, develop or enhance our products, take advantage of business opportunities or respond to competitive pressures, which could result in lower revenues and reduce the competitiveness of our products.

In addition, any potential debt level increases could have important consequences, including:

19 unchanged sentences

Completing acquisitions could consume significant amounts of cash.

incur interest expense and may have to comply with covenants and secure that debt obligation with our assets.

If we finance acquisitions by issuing equity or convertible debt securities, our existing stockholders will likely experience dilution, and if we finance future acquisitions with debt funding, we will incur interest expense and may have to comply with covenants and secure that debt obligation with our assets.

Our investments in new businesses, products, services, technologies, joint ventures and other strategic transactions are inherently risky, and could disrupt our current operations.

2 unchanged sentences

Because these investments are inherently risky, no assurance can be given that such investments will be successful and will not adversely affect our reputation, business prospects, results of operation and financial condition.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is calculated.

We may be adversely affected by changes in LIBOR reporting practices or the index used to replace LIBOR.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021.

It is unclear whether replacement for LIBOR will be established such that it continues to exist after 2021.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

4 unchanged sentences

Whether SOFR will become a widely accepted benchmark in place of LIBOR, however, remains in question.

As such, the future of LIBOR and potential alternatives thereto are uncertain at this time.

As such, the future of LIBOR and potential alternatives thereto

are uncertain at this time.

If LIBOR is discontinued, the terms of our Credit Agreement provide for the use of an alternative rate.

14 unchanged sentences

Pera is entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally.

As of November 6, 2020, Mr.

As of February 5, 2021, Mr.

Pera beneficially owned 56,278,181 shares of our common stock.

11 unchanged sentences

Pera may adversely affect the price of our common stock.

has also indicated that he intends to continue to own at least a majority of our outstanding shares of common stock.

Pera has also indicated that he intends to continue to own at least a majority of our outstanding shares of common stock.

Not paying cash dividends to our stockholders, or repurchasing shares of our common stock pursuant to our previously announced stock repurchase program, could cause the market price for our common stock to decline.

12 unchanged sentences

Factors that could cause our results of operation and stock price to fluctuate include:

• varying demand for our products due to the financial and operating condition of our distributors and their customers, distributor inventory management practices and general economic conditions;

• varying demand for our products due to the financial and operating condition of our distributors and their customers,

distributor inventory management practices and general economic conditions;

• shifts in our fulfillment practices including increasing inventory levels as part of efforts to decrease our delivery lead times;

19 unchanged sentences

Department of the Treasury’s Office of Foreign Asset Control (“OFAC”) regarding these compliance issues.

We resolved the matters described in our self-disclosures with the BIS and OFAC, and have taken significant steps towards ensuring

our compliance with export control regulations and embargoes.

We resolved the matters described in our self-disclosures with the BIS and OFAC, and have taken significant steps towards ensuring our compliance with export control regulations and embargoes.

It is, however, possible that violations may occur in the future.

15 unchanged sentences

As these regulations and standards evolve, and if new regulations or standards are implemented, we will be required to modify our products or develop and support new versions of our products, and our compliance with these regulations and standards may become more burdensome.

The failure of our products to comply, or delays in compliance, with the various existing and evolving industry regulations and standards could prevent or delay introduction of our products, which could harm our business.

The failure of our products to comply, or delays in compliance, with the various existing and evolving industry

regulations and standards could prevent or delay introduction of our products, which could harm our business.

End customer uncertainty regarding future policies may also affect demand for communications products, including our products.

14 unchanged sentences

In particular, there are numerous U.S.

federal, state, and local laws and regulations and foreign laws and regulations regarding privacy

and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data.

federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data.

Such laws and regulations often have changes in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions.

17 unchanged sentences

The handling of such information is increasingly subject to regulations in numerous jurisdictions around the world.

These regulations are typically intended to protect the privacy and security of personal information that is collected, stored and transmitted in or from the governing jurisdiction.

These regulations are typically intended to protect the privacy and security of personal

information that is collected, stored and transmitted in or from the governing jurisdiction.

In addition, because various foreign jurisdictions have different regulations concerning the storage and transmission of personal information, we may face unknown requirements that pose compliance challenges in new geographic markets that we seek to enter.

9 unchanged sentences

The operation of our products by network operators or service providers in the United States or elsewhere in a manner not in compliance with local law could result in fines, operational disruption, or harm to our reputation.

In addition, if new spectrums, either licensed or unlicensed, are made available by government regulatory agencies for broadband wireless communication that may disrupt the competitive landscape of our industry and impact our

We could be adversely affected by unfavorable results in litigation.

17 unchanged sentences

Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations, and prevent us from producing accurate and timely financial statements to manage our business.

If we fail to do so, our business could be negatively affected and our independent registered public accounting firm may be unable to attest to the fair presentation of our Consolidated Financial Statements included in our Annual Report on Form 10-K in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.

included in our Annual Report on Form 10-K in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.

If we cannot provide reliable financial reports and effectively prevent fraud, our reputation and results of operations could be harmed.

Even effective internal controls have inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.

Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of finan cial statements.

Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.

The preparation of Consolidated Financial Statements also requires us to make estimates and assumptions.

7 unchanged sentences

As described in more detail in our Annual Report on Form 10-K for year ended June 30, 2017, under Item 9A.

“Controls and

Procedures”, the Company completed the remediation efforts of such material weakness, completed testing of the controls to address such material weaknesses and concluded that the previously reported material weaknesses in internal controls over financial reporting have been satisfactorily remediated as of June 30, 2017.

“Controls and Procedures”, the Company completed the remediation efforts of such material weakness, completed testing of the controls to address such material weaknesses and concluded that the previously reported material weaknesses in internal controls over financial reporting have been satisfactorily remediated as of June 30, 2017.

Any such failure (including any failure to implement new or improved controls, difficulties in the execution of such implementation or deterioration of our current control practices) may result in an inability to prevent fraud, or cause us to fail to meet our reporting obligations.

31 unchanged sentences

• changes in tax law and/or generally accepted accounting principles;

From time to time the United States, foreign and state governments make substantive changes to tax rules and the application of rules

to companies which may impact our taxes on international earnings.

From time to time the United States, foreign and state governments make substantive changes to tax rules and the application of rules to companies which may impact our taxes on international earnings.

We regularly assess the likelihood of favorable or unfavorable outcomes resulting from examinations to determine the adequacy of our provision for income taxes.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors