I like it when you start pulling out the heavy artilary -g-
(the 10 Q's)
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We Depend Upon A Small Number Of Customers.
Quantum Corporation ("Quantum"), through its manufacturing subcontractor,
accounted for approximately 45%, 61% and 70%, respectively, of our (HIFN) revenues in
fiscal 1999, 1998 and 1997. During 1999, Lucent, through its manufacturing
subcontractors, accounted for approximately 38% of our revenues for fiscal 1999.
Neither Quantum nor Lucent are under any binding obligation to order from us. If
our sales to Quantum or Lucent decline, our business, financial condition and
results of operations could suffer. We expect that our most significant
customers in the future could be different from our largest customers today for
a number of reasons, including customers' deployment schedules and budget
considerations. As a result, we believe we may experience significant
fluctuations in our results of operations on a quarterly and an annual basis.
......
Limited numbers of network and storage equipment vendors account for a
majority of packet processor purchases in their respective markets. In
particular, the market for network equipment that would include packet
processors, such as routers, remote access concentrators and firewalls, is
dominated by a few large vendors, including Cisco Systems, Inc., Lucent
Technologies Inc., Nortel Networks, Inc. and 3Com Corporation. As a result, our
future success will depend upon our ability to establish and maintain
relationships with these companies. If these network equipment vendors do not
incorporate our packet processors into their products, our business, financial
condition and results of operations could suffer.
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so HIFN obviously does not have CSCO, NT, or COMS as
customers or they would have bragged about them, as they
should. They are licensing technology to IBM and MSFT
through a STAC subsidiary.
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--------Our Markets Are Highly Competitive.
We compete in markets that are intensely competitive and are expected to
become more competitive as current competitors expand their product offerings
and new competitors enter the market. The markets that we compete in are subject
to frequent product introductions with improved price-performance
characteristics, rapid technological change, and the continued emergence of new
industry standards. Our products compete with offerings from companies such as
Analog Devices, Inc., Information Resource Engineering Inc., International
Business Machines Corporation ("IBM"), Rainbow Technologies, Inc., and Phillips
Semiconductors, Inc. In 1994, Stac entered into two license agreements with IBM
in which Stac granted IBM the right to use, but not sublicense, our patented
compression technology in IBM hardware and software products. Stac also entered
into a license agreement with Microsoft Corporation ("Microsoft") in 1994
whereby Stac granted Microsoft the right to use, but not sublicense, our
compression technology in their software products. We expect significant future
competition from major domestic and international semiconductor suppliers.
Several established electronics and semiconductor suppliers have recently
entered, or expressed an interest to enter, the network equipment market. We
also may face competition from suppliers of products based on new or emerging
technologies. Furthermore, many of our existing and potential customers
internally develop solutions which attempt to perform all or a portion of the
functions performed by our products.
A key element of our packet processor architecture is our encryption
technology. In order to export our encryption-related products, the U.S.
Department of Commerce requires us to obtain a license. Foreign competitors that
are not subject to similar requirements have an advantage over us in their
ability to rapidly respond to the requests of customers in the global market.
Many of our current and prospective competitors offer broader product lines
and have significantly greater financial, technical, manufacturing and marketing
resources than us. As a result, they may be able to adapt more quickly to new or
emerging technologies and changes in customer requirements or to devote greater
resources to promote the sale of their products. In particular, companies such
as Intel Corporation, Lucent Technologies Inc., Motorola, Inc., National
Semiconductor Corporation, and Texas Instruments Incorporated have a significant
advantage over us given their relationships with many of our customers, their
extensive marketing power and name recognition and their much greater financial
resources. In addition, current and potential competitors may decide to
consolidate, lower the prices of their products or to bundle their products with
other products. Any of the above would significantly and negatively impact our
ability to compete and obtain or maintain market share. If we are unable to
successfully compete against our competitors, our business, results of
operations and financial condition will suffer.---------- |
