**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**





x
            **QUARTERLY
                REPORT PURSUANT
                TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**





**For
      the quarterly period ended September 30, 2007**





**OR**





o
            **TRANSITION
                REPORT
                PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**





**For
      the transition period from ____________ to ____________.**




**Commission
      file number: 000-50730**




**VIEWSONIC
      CORPORATION**


**(***Exact
      name of Registrant as Specified in Its
      Charter***)**




**Delaware**
            **95-4120606***(State
                or Other Jurisdiction of Incorporation or
                Organization)*
            *(I.R.S.
                Employer Identification No.)*





**381
      Brea Canyon Road**


**Walnut,
      California 91789**


**(909)
      444-8888**


*(Address,
      including Zip Code, of Registrant's Principal Executive
      Offices*


*and
      Registrant's Telephone Number, including Area Code)*





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports) and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes xNo o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated file” in Rule 12b-2 of the Exchange Act (check
      one):





Large
                accelerated filer  o
            Accelerated
                filer  o
            Non-accelerated
                filer  x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes oNo x





The
      number of shares of the registrant's common stock outstanding was 351,707,640
      shares and the number of shares of Series C preferred stock outstanding was
      3,300,000 shares, each as of October 31, 2007.







1





**ViewSonic
      Corporation**


**Form
      10-Q**


**Table
      of contents**






**Page****Part
                I: financial information**Item
                1.
            
            Financial
                statements (unaudited):
            3Condensed
                consolidated balance sheets as of September 30, 2007 and December
                31,
                2006
            3Condensed
                consolidated statements of operations for the three and nine months
                ended
                September 30, 2007 and 2006
            4Condensed
                consolidated statements of cash flows for theninemonths ended September 30, 2007
                and 2006
            5Notes
                to
                condensed consolidated financial statements
            6Item
                2.
            
            Management’s
                discussion and analysis of financial condition and results of
                operations
            16Item
                3.
            
            Quantitative
                and
                qualitative disclosure about market risk
            26Item
                4.
            
            Controls
                and
                procedures
            26**Part
                II: other information**Item
                1.
            
            Legal
                proceedings
            27Item
                1A.
            
            Risk
                factors
            28Item
                2.
            
            Unregistered
                sales of equity securities and use of proceeds
            37Item
                3.
            
            Defaults
                upon
                senior securities
            37Item
                4.
            
            Submission
                of
                matters to a vote of securities holders
            38Item
                5.
            
            Other
                information
            38Item
                6.
            
            Exhibits
            39Signatures
            40




2
 ***Table
            of Contents***





**Part
      I**





**ViewSonic
      Corporation and Subsidiaries**





**Condensed
      consolidated balance sheets**





**September
      30, 2007 and December 31, 2006**





*(in
                thousands, except share data and par value)*
            
            **September 30,**
            
            
            **December 31,****2007**
            
            
            **2006****(unaudited)****Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            94,741
            
            
            $
            69,079Trade
                receivables, net
            
            
            305,664
            
            
            
            277,162Other
                receivables
            
            
            14,658
            
            
            
            7,213Inventories
            
            
            196,449
            
            
            
            194,049Deferred
                income taxes
            
            
            5,281
            
            
            
            7,734Prepaids
                and other current assets
            
            
            6,262
            
            
            
            3,670Income
                taxes receivable
            
            
            83
            
            
            
            152Total
                current assets
            
            
            623,138
            
            
            
            559,059Property,
                plant and equipment, net
            
            
            21,449
            
            
            
            14,445Long-term
                investments
            
            
            118
            
            
            
            237Goodwill
            
            
            1,351
            
            
            
            1,347Other
                assets, net
            
            
            4,623
            
            
            
            3,549Total
                assets
            
            $
            650,679
            
            
            $
            578,637**Liabilites
                and stockholders' equity**Current
                liabilities:Bank
                borrowings
            
            $
            6,366
            
            
            $
            307Current
                portion of notes payable - related party
            
            
            43,000
            
            
            
            -Accounts
                payable
            
            
            459,560
            
            
            
            388,554Accrued
                promotional expenses
            
            
            20,854
            
            
            
            25,852Accrued
                warranty expense
            
            
            20,065
            
            
            
            24,455Other
                accrued expenses
            
            
            26,286
            
            
            
            32,446Total
                current liabilities
            
            
            576,131
            
            
            
            471,614Subordinated
                notes payable - related party
            
            
            -
            
            
            
            43,000Deferred
                income taxes
            
            
            3,224
            
            
            
            -Stockholders'
                equity:Common
                stock, $.01 par value 600,000,000 shares authorized; 351,707,640
                and
                354,594,666 shares issued as of September 30, 2007 and December 31,
                2006,
                respectively
            
            
            3,517
            
            
            
            3,546Preferred
                stock, $.001 par value 22,800,000 shares authorized; 3,300,000 shares
                issued as of September 30, 2007 and December 31, 2006
            
            
            3
            
            
            
            3Additional
                paid-in capital
            
            
            93,034
            
            
            
            94,181Accumulated
                deficit
            
            
            (23,677
            )
            
            
            (31,468
            )Accumulated
                other comprehensive loss
            
            
            (1,553
            )
            
            
            (2,239
            )Total
                stockholders' equity
            
            
            71,324
            
            
            
            64,023Total
                liabilities and stockholders' equity
            
            $
            650,679
            
            
            $
            578,637





*The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.*





3
 ***Table
            of Contents***





**ViewSonic
      Corporation and Subsidiaries**





**Condensed
      consolidated statements of operations**





*(in
                thousands, except share data)*
            
            **For
                the three months**
            
            
            **For
                the nine months****ended
                September 30,**
            
            
            **ended
                September 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Net
                sales
            
            $
            402,773
            
            
            $
            426,445
            
            
            $
            1,236,478
            
            
            $
            1,132,507Cost
                of sales
            
            
            371,792
            
            
            
            383,992
            
            
            
            1,136,792
            
            
            
            1,029,640Gross
                profit
            
            
            30,981
            
            
            
            42,453
            
            
            
            99,686
            
            
            
            102,867Selling,
                general and administrative expenses
            
            
            32,947
            
            
            
            29,979
            
            
            
            91,409
            
            
            
            86,903(Loss)
                income from operations
            
            
            (1,966
            )
            
            
            12,474
            
            
            
            8,277
            
            
            
            15,964Other
                income (expense):Interest
                expense, net
            
            
            (757
            )
            
            
            (366
            )
            
            
            (1,656
            )
            
            
            (53
            )Other
                income (expense), net
            
            
            1,626
            
            
            
            (651
            )
            
            
            3,332
            
            
            
            970Total
                other income (expense), net
            
            
            869
            
            
            
            (1,017
            )
            
            
            1,676
            
            
            
            917(Loss)
                income before income taxes
            
            
            (1,097
            )
            
            
            11,457
            
            
            
            9,953
            
            
            
            16,881Provision
                for income taxes
            
            
            616
            
            
            
            860
            
            
            
            1,752
            
            
            
            2,183Net
                (loss) income
            
            
            (1,713
            )
            
            
            10,597
            
            
            
            8,201
            
            
            
            14,698Preferred
                stock accretion
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (48
            )Net
                (loss) income available to common shareholders
            
            $
            (1,713
            )
            
            $
            10,597
            
            
            $
            8,201
            
            
            $
            14,650(Loss)
                earnings per common share:Basic
            
            $
            -
            
            
            $
            0.03
            
            
            $
            0.02
            
            
            $
            0.04Diluted
            
            $
            -
            
            
            $
            0.03
            
            
            $
            0.02
            
            
            $
            0.04Weighted
                averages shares used in per share calculations:Basic
            
            
            351,681
            
            
            
            354,326
            
            
            
            352,840
            
            
            
            354,173Diluted
            
            
            351,681
            
            
            
            357,604
            
            
            
            360,008
            
            
            
            359,706





*The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.*





4
 ***Table
            of Contents***





**ViewSonic
      Corporation and Subsidiaries**





**Condensed
      consolidated statements of cash flows**





*(in
                thousands)*
            
            **Nine
                months ended**
              **September
                30,****2007**
            
            
            **2006****Cash
                flows from operating activities**Net
                income
            
            $
            8,201
            
            
            $
            14,698Adjustments
                to reconcile net income to net cash used in operating
                activities:Non-cash
                gain from litigation settlement (Note 10)
            
            
            (1,710
            )
            
            
            -Depreciation
                and amortization
            
            
            1,481
            
            
            
            2,157(Gain)
                loss on disposal of property, plant and equipment
            
            
            (4
            )
            
            
            4Provision
                for doubtful accounts
            
            
            284
            
            
            
            384Net
                loss on impairment of long-term investments
            
            
            135
            
            
            
            1,934Deferred
                income taxes
            
            
            2,971
            
            
            
            134Stock-based
                compensation expense
            
            
            503
            
            
            
            161Changes
                in operating assets and liabilities:Trade
                receivables
            
            
            (27,613
            )
            
            
            (95,598
            )Other
                receivables
            
            
            (7,329
            )
            
            
            (1,166
            )Inventories
            
            
            (1,711
            )
            
            
            1,670Prepaids
                and other current assets
            
            
            (2,501
            )
            
            
            (375
            )Accounts
                payable
            
            
            69,132
            
            
            
            52,886Accrued
                promotional and other expenses
            
            
            (9,300
            )
            
            
            8,225Accrued
                warranty expense
            
            
            (4,419
            )
            
            
            3,523Income
                taxes payable/receivable
            
            
            (2,092
            )
            
            
            675Net
                cash provided by (used in) operating activities
            
            
            26,028
            
            
            
            (10,688
            )**Cash
                flows from investing activities**Proceeds
                from sale of property, plant and equipment
            
            
            22
            
            
            
            21Purchase
                of property, plant and equipment
            
            
            (6,058
            )
            
            
            (931
            )Proceeds
                on sale of long-term investments
            
            
            -
            
            
            
            1,277Proceeds
                on sale of short-term investments
            
            
            -
            
            
            
            15,152Purchase
                of short-term investments
            
            
            -
            
            
            
            (15,213
            )Change
                in other assets
            
            
            (992
            )
            
            
            -Net
                cash (used in) provided by investing activities
            
            
            (7,028
            )
            
            
            306**Cash
                flows from financing activities**Net
                proceeds from (repayments on) bank borrowings
            
            
            5,984
            
            
            
            (4,920
            )Proceeds
                from issuance of common stock
            
            
            43
            
            
            
            236Proceeds
                from issuance of preferred stock
            
            
            -
            
            
            
            33Redemption
                of preferred stock
            
            
            -
            
            
            
            (15,000
            )Net
                cash provided by (used in) financing activities
            
            
            6,027
            
            
            
            (19,651
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            635
            
            
            
            33Net
                increase (decrease) in cash and cash equivalents
            
            
            25,662
            
            
            
            (30,000
            )Cash
                and cash equivalents at beginning of period
            
            
            69,079
            
            
            
            93,998Cash
                and cash equivalents at end of period
            
            $
            94,741
            
            
            $
            63,998





**Supplemental
      disclosure of non-cash investing activity:**


In
      2007,
      non-cash activity includes the reclassification of a $2.3 million deposit on
      a
      building made in 2006 from other assets to property, plant and
      equipment.





*The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.*





5
 ***Table
            of Contents***





**ViewSonic
      Corporation and Subsidiaries**





**Notes
      to condensed consolidated financial statements**





**(unaudited)**





**Note 1—Summary
      of significant accounting policies**





***Basis
      of presentation***





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles in the
      United States for interim condensed consolidated financial information and
      with
      the instructions for Form 10-Q and Article 10 of Regulation
      S-X.





The
      accompanying unaudited condensed consolidated financial statements for ViewSonic
      Corporation and its subsidiaries, or collectively, the Company, contain all
      adjustments, which are normal and recurring, necessary to present fairly the
      Company’s financial position as of September 30, 2007 and the Company’s results
      of operations and cash flows for the three and nine months ended September
      30,
      2007 and 2006. The condensed consolidated balance sheet as of December 31,
      2006
      is derived from the December 31, 2006 audited consolidated financial
      statements.





The
      results of operations for the three and nine months ended September 30, 2007
      are
      not necessarily indicative of the results to be expected for the full year.
      The
      information included in this Quarterly Report on Form 10-Q should be read
      in conjunction with the audited consolidated financial statements for the year
      ended December 31, 2006 and the notes thereto included in the Company’s
      Form 10-K filed with the Securities and Exchange Commission, or the SEC, on
      March 16, 2007.





The
      preparation of these financial statements requires management to make estimates
      and assumptions that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosures of contingent assets and
      liabilities. Management bases its estimates on historical experience and other
      factors believed to be reasonable under the circumstances which form the basis
      for making judgments about the carrying values of assets and liabilities that
      are not readily apparent from other sources. Actual results may differ from
      these estimates under different assumptions or conditions.





***Revenue
      recognition, warranty and promotions***





Revenues
      are recognized when the risk of loss is transferred, persuasive evidence of
      an
      arrangement exists, the price is fixed or readily determinable and
      collectability is reasonably assured. The Company extends rights of return
      to
      its customers, which are accrued for based on estimated future returns
      determined by using estimates and historical experience.





The
      Company provides a variety of warranty programs worldwide, which are based
      on
      specific products and geographic locations. Accruals are provided for such
      estimated future costs at the time the product is sold. Estimates are primarily
      based on historical experience and other available information.





The
      Company offers promotions such as rebates, price protection and other incentives
      to customers in the normal course of business. Accruals for these promotions
      are
      provided for based on estimates and historical experience. The costs of these
      promotions are offset against sales.





The
      Company's primary business practice is to have finished goods delivered from
      its
      contract manufacturers directly to the Company's regional warehouses, where
      they
      are stored for eventual shipment to its customers. However, the Company
      occasionally requests that its contract manufacturer ship finished goods
      directly to its customers. For vendor drop shipment sales, the Company retains
      title to the shipment from the time it leaves the contract manufacturer's port
      of choice until it reaches its destination at which time revenue is
      recognized.





***Promotional
      pricing incentives from vendors***





The
      Company receives promotional pricing incentives from its product vendors. The
      amount of the pricing incentives is based on various market factors including
      the volatility of pricing of key product components, market dynamics and the
      quantity of the Company's purchases from such vendors. The pricing incentives
      do
      not require the Company to commit to future component purchases from these
      vendors. The Company records the reimbursement from vendors for these
      promotional pricing incentives when the Company is released of the legal
      liability for the payment of the product purchases by the vendors. The benefit
      from pricing incentives related to products that have not been sold is deferred
      and recorded as a reduction of inventory cost. The benefit from pricing
      incentives related to products that have been sold is recorded as a reduction
      of
      the cost of sales.





6
 ***Table
            of Contents***





***Recent
      accounting pronouncements***





In
      February 2007, the Financial Accounting Standards Board, or FASB, issued
      Statement of Financial Accounting Standards, or SFAS, No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities—Including an
      Amendment of FASB Statement No. 115* , or SFAS 159. SFAS 159
      permits, but does not require, companies to report at fair value the majority
      of
      recognized financial assets, financial liabilities and firm commitments. Under
      this standard, unrealized gains and losses on items for which the fair value
      option is elected are reported in earnings at each subsequent reporting date.
      The Company is currently assessing the effect SFAS 159 may have, if any, on
      its financial statements when adopted on January 1, 2008.





In
      September 2006, the FASB issued SFAS No. 157, *Fair Value
      Measurements*, or SFAS 157, which provides guidance for using fair
      value to measure assets and liabilities. SFAS 157 clarifies that for items
      that are not actively traded, such as certain kinds of derivatives, fair value
      should reflect the price in a transaction with a market participant, including
      an adjustment for risk, not just the company's mark-to-model value.
      SFAS 157 also requires expanded disclosure of the effect on earnings for
      items measured using unobservable data and applies whenever other standards
      require (or permit) assets or liabilities to be measured at fair value but
      does
      not expand the use of fair value in any new circumstances. SFAS 157 will be
      effective for the Company beginning January 1, 2008. The Company is
      currently assessing the effect SFAS 157 may have, if any, on its financial
      statements when adopted on January 1, 2008.





In
      July 2006, the FASB issued FASB Interpretation
      No. 48, *Accounting for Uncertainty in Income Taxes—an
      interpretation of FASB Statement 109*, or FIN 48. It clarifies the
      accounting for income taxes by prescribing a minimum recognition threshold
      a tax
      position is required to meet before being recognized in the financial
      statements. FIN 48 also provides guidance on derecognition, measurement,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition. Upon adoption on January 1, 2007, the Company
      recognized a $0.4 million increase to the January 1, 2007 accumulated
      deficit balance. In addition, consistent with the provisions of FIN 48, the
      Company reclassified $3.1 million of income tax liabilities from current to
      non-current liabilities because payment of cash is not anticipated within one
      year of the balance sheet date.





As
      of
      January 1, 2007, the balance of gross unrecognized tax benefit was
      $4.4 million. To the extent these unrecognized tax benefits are ultimately
      recognized, they will impact the effective tax rate in a future
      period.





The
      Company has elected to classify interest expense related to income tax
      liabilities, when applicable, as part of the interest expense in its condensed
      consolidated statements of operations rather than income tax expense. The
      Company will classify income tax penalties as part of selling, general and
      administrative expense in its condensed consolidated statements of operations.
      The Company has less than $0.1 million of penalties accrued and an
      immaterial amount of interest expense accrued as of  September 30,
      2007. No amount of interest or penalties was accrued as of January 1,
      2007.





The
      Company operates in multiple tax jurisdictions, both within the United States
      and outside of the United States, and faces audits from various tax authorities
      regarding transfer pricing, the deductibility of certain expenses, intercompany
      transactions as well as other matters. In many cases the Company's uncertain
      tax
      positions are related to tax years that remain subject to examination by the
      relevant tax authorities. The Company is no longer subject to income tax
      examinations by tax authorities in its major tax jurisdictions as
      follows:




**Tax
                jurisdiction**
            **Tax
                years no longer subject to audit**United
                States
            2003
                and priorUnited
                Kingdom
            2004
                and priorCanada
            2000
                and priorGermany
            2000
                and priorFrance
            2003
                and priorTaiwan
            2002
                and priorChina
            2001
                and prior




7
 ***Table
            of Contents***





Certain
      of the Company's non-U.S. income tax returns are currently under various stages
      of audit by applicable tax authorities and the amounts ultimately paid, if
      any,
      upon resolution of the issues raised by the tax authorities may differ
      materially from the amounts accrued for each year.





In
      May
      2007, the Financial Accounting Standards Board, or FASB, issued FASB Staff
      Position No. FASB Interpretation No. 48, *Definition of Settlement in FASB
      Interpretation No. 48*, or FSP FIN 48-1, which amends FIN 48 and provides
      guidance on how a company should determine whether a tax position is effectively
      settled for the purpose of recognizing previously unrecognized tax benefits.
      This FSP clarifies that a tax position could be effectively settled upon
      examination by a taxing authority. In determining whether a tax position is
      effectively settled, companies should make the assessment on
      a position-by-position basis, but a company could conclude that all
      positions in a particular tax year are effectively settled. The Company adopted
      the provisions of FSP FIN 48-1 on January 1, 2007. During the three months
      ended
      September 30, 2007, approximately $1.1 million of income tax liabilities,
      related to uncertain intercompany transfer pricing items, was effectively
      settled due to the lapse of the applicable statue of limitation, therefore
      the
      $1.1 million of unrecognized tax benefit was recognized during the three months
      ended September 30, 2007. However, this was offset by additional valuation
      allowance for net operating losses which were previously utilized to offset
      the
      unrecognized tax position associated with these intercompany transfer pricing
      items.





**Note 2—Stock-based
      compensation**





On
      January 1, 2006, the Company adopted the provisions of Statement of
      Financial Accounting Standards No. 123(R), *Share-Based
      Payment*, or SFAS 123R, which revises Statement of Financial Accounting
      Standards No. 123,*Accounting for Stock-Based* Compensation, or
      SFAS 123, supersedes Accounting Principles Board, or APB, Opinion
      No. 25,*Accounting for Stock Issued to Employees*, or APB 25, and
      amends Statement of Financial Accounting Standards No. 95,*Statement of
      Cash Flows*, or SFAS 95. Under SFAS 123R, the fair value of stock-based
      awards to employees must be estimated at the date of grant using an option
      pricing model and recognized as expense over the requisite service period for
      those awards that are ultimately expected to vest.





The
      Company adopted SFAS 123R using the prospective method. Under the
      prospective method, prior periods are not revised for comparative purposes.
      Non-public companies that previously applied SFAS 123 using the minimum
      value method would continue to account for unvested stock options outstanding
      at
      the date of adoption in the same manner as they had been accounted for prior
      to
      adoption. All awards granted, modified or settled after the date of adoption
      are
      accounted for using the measurement, recognition and attribution provisions
      of
      SFAS 123R.





***Stock
      option activity***





The
      Company has two employee stock plans: the 1999 Stock Plan, or the 1999 Plan,
      and
      the 2004 Equity Incentive Plan, or the 2004 EIP. Upon approval of the 2004
      EIP,
      the 1999 Plan was terminated (except for all options previously granted and
      outstanding under the 1999 Plan). The 2004 EIP provides for the granting of
      stock options to eligible employees and non-employee directors. Options granted
      under this plan are granted at an exercise price equal to the fair market value
      of the Company's common stock on the date of grant, vest over three or four
      years and expire ten years after their original date of grant. As the Company's
      common stock is not publicly traded, the fair market value of the Company's
      common stock is approved by the Company's Board of Directors based on various
      information, assumptions and factors. As of September 30, 2007, there were
      6.8 million shares available for future grants under the 2004
      EIP.





On
      February 2, 2007, the Compensation Committee of the Board of Directors
      approved the Long Term Incentive Program Summary of Terms, or the Program.
      Members of the Company’s executive management team and other key members of
      senior management designated by the Compensation Committee are eligible to
      participate in the Program. The Compensation Committee established the
      achievement of revenue and net income targets as the Performance Targets under
      the Program.





Participants
      in the Program were each granted non-statutory stock options under the 2004
      Equity Incentive Plan at an exercise price of $0.54 per share, the fair market
      value of the Company’s common stock as determined in good faith by the
      Compensation Committee on February 2, 2007. A maximum number of
      5.4 million shares are eligible for vesting under the Program if both
      Performance Targets are achieved at the 150% level. The maximum number of shares
      is referred to as the Maximum Award. The portion of the stock option in which
      a
      participant could potentially vest if 100% of the Performance Targets are
      achieved is referred to as the Target Award.





The
      Program requires the achievement of at least 100% of the Performance Targets
      for
      fiscal year 2007 as a minimum threshold before any of the shares subject to
      the
      stock options vest. The vesting of the stock option is contingent upon the
      participant's continued service through the applicable vesting date and is
      subject to specified change in control and other conditions. The achievement
      of
      the Performance Targets will be at the sole discretion of the Compensation
      Committee and shall be determined by the Compensation Committee after the
      completion of the fiscal year 2007 audit, which is referred to as the
      Determination Date. If the minimum threshold is not achieved, the stock options
      will be automatically cancelled and forfeited in their entirety. On the
      Determination Date, the stock option award, known as the Eligible Award, will
      be
      determined by multiplying the Target Award by the percentage of achievement
      of
      the Performance Targets (a range of between 100% and 150% based on the levels
      achieved against both the Performance Targets). The Eligible Award will vest
      331/3%
      on the
      Determination Date, 331/3% on
      February 2, 2009 and 331/3% on
      February 2, 2010. The difference between the Maximum Award and the Eligible
      Award, if any, shall be forfeited and cancelled on the Determination
      Date.





8
 ***Table
            of Contents***




On
      July
      18, 2007, the Compensation Committee of the Board of Directors modified the
      vesting of stock options granted to participants in the Program such that all
      or
      a portion of the stock option subject to the Target Award and Maximum Award
      will
      vest as to 331/3% on
      the
      February 2, 2008, 331/3%
      on February 2,
      2009 and 331/3% on
      February
      2, 2010. A total of 3.7 million shares were modified. The performance criteria
      for the vesting of the remaining 1.7 million of stock options were not
      changed. The modification in vesting of stock options resulted in a
      $123,000 cumulative expense adjustment.




The
      table
      below summarizes the stock option activity under the Company's 1999 Plan and
      2004 EIP:





**Weighted****average****Weighted**
            
            **remaining****Number
                of**
            
            
            **average**
            
            **contractual****shares**
            
            
            **price**
            
            **term****(in
                000s)**
            
            
            **per
                share**
            
            **(in
                years)**Outstanding
                at December 31, 2006
            
            
            25,341
            
            
            $
            0.40Granted
            
            
            12,440
            
            
            
            0.62Exercised
            
            
            (113
            )
            
            
            0.38Cancelled
            
            
            (2,212
            )
            
            
            0.40Outstanding
                at September 30, 2007
            
            
            35,456
            
            
            $
            0.47
            
            6.65Exercisable
                at September 30, 2007
            
            
            19,765
            
            
            $
            0.38
            
            4.51





The
      total
      intrinsic value of options outstanding as of September 30, 2007 was
      $5.4 million. Total cash received from the exercise of employee stock
      options was $43,000 for the nine months ended September 30,
      2007.





The
      following table summarizes information for options outstanding as of September
      30, 2007:





**Range
                of exercise prices**
            
            
            **Numbers
                of options outstanding (in 000s)**
            
            
            **Weighted
                average remaining contractual term (in years)**
            
            
            **Weighted
                average exercise per share**
            
            
            **Number
                of options exercisable (in 000's)**$0.38
            
            
            
            20,558
            
            
            
            4.60
            
            
            $
            0.38
            
            
            
            19,327$0.45
            
            
            
            612
            
            
            
            8.19
            
            
            $
            0.45
            
            
            
            268$0.54
            
            
            
            7,244
            
            
            
            9.32
            
            
            $
            0.54
            
            
            
            170$0.57
            
            
            
            1,885
            
            
            
            9.62
            
            
            $
            0.57
            
            
            
            -$0.73
            
            
            
            5,157
            
            
            
            9.80
            
            
            $
            0.73
            
            
            
            -







***Valuation
      and expense recognition of stock-based awards under
      SFAS 123R***





For
      the
      three and nine months ended September 30, 2007, stock-based compensation expense
      for employee stock options recognized was $369,000 and $503,000, respectively.
      No income tax benefit related to stock-based compensation expense was recognized
      for the three and nine months ended September 30, 2007. The Company used the
      Black-Scholes option-pricing model to estimate the fair value of employee stock
      options. The determination of fair value using the Black-Scholes option-pricing
      model is affected by the fair market value of the Company's common stock as
      well
      as the use of certain highly subjective estimates and assumptions including
      expected stock price volatility, risk-free interest rate, expected dividends
      and
      projected employee stock option exercise behaviors.





All
      option awards were valued as a single award and amortized on a straight-line
      basis over the requisite service period. The fair value of each option grant
      was
      estimated on the date of grant using the Black-Scholes option-pricing model
      with
      the following assumptions for the periods indicated:





9
 ***Table
            of Contents***




**Nine
                months ended September 30,****2007**
            
            
            **2006**Expected
                volatility
            
            
            44.1%
            
            
            
            52.0%Risk-free
                interest rate
            
            
            4.7%
            
            
            
            5.0%Expected
                dividend yield
            
            
            0%
            
            
            
            0.0%Expected
                option life (in years)
            
            
            6.14
            
            
            
            6.25Weighted
                average fair value of stock options granted per share
            
            $
            0.31
            
            
            $
            0.25




Upon
      adoption of SFAS 123R, the Company changed its expected volatility
      calculation to use an average of the expected volatilities of similar entities
      whose shares are publicly traded. In determining similarity of entities, the
      Company considered various factors including the industry, life cycle, size
      and
      financial leverage of such entities. The Company believes this method provides
      a
      more accurate estimate of stock price volatility over the expected life of
      the
      stock option awards. Prior to the adoption of SFAS 123R, the Company used
      the minimum value method to estimate the fair value of its stock options. Under
      the minimum value method, expected volatility is omitted.





The
      risk-free interest rate assumption is based on observed interest rates for
      the
      expected option life of the Company's stock options. The expected dividend
      yield
      assumption is based on the Company's expectation of future dividend payouts.
      The
      Company has never declared or paid any cash dividends on its common stock and
      currently does not anticipate paying such cash dividends. The Company used
      the
      simplified method for its expected option life assumption as allowed by SEC
      Staff Accounting Bulletin No. 107,*Share-Based
      Payment*.





SFAS 123R
      requires stock-based compensation expense to be recognized only for those stock
      options that are ultimately expected to vest. An estimate of forfeiture rate
      must be made and applied at the time of grant and revised in subsequent periods
      on a cumulative basis in the period of revision. The Company considered various
      factors including its actual historical experience of pre-vesting option
      forfeitures bifurcated by employee groups as the basis to arrive at an estimated
      average annual forfeiture rate of 4.3% for the nine months ended September
      30,
      2007.





As
      of
      September 30, 2007, the remaining amount of unrecognized compensation cost
      related to employee stock options was $3.5 million, which is expected to be
      recognized over a weighted average period of 3.2 years.





**Note 3—Comprehensive
      (loss) income**





Comprehensive
      (loss) income includes foreign currency translation gains and losses and
      unrealized gains and losses on marketable securities classified as available
      for
      sale. The following table sets forth the calculation of comprehensive (loss)
      income for the periods indicated (in thousands):





**Three
                Months Ended**
              **September
                30,**
            
            
            **Nine
                Months Ended**
              **September
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Net
                (loss) income
            
            $
            (1,713
            )
            
            $
            10,597
            
            
            $
            8,201
            
            
            $
            14,698Foreign
                currency translation
            
            
            156
            
            
            
            (119
            )
            
            
            686
            
            
            
            82Unrealized
                holding gains on marketable securities, less realized
                gains
            
            
            -
            
            
            
            247
            
            
            
            -
            
            
            
            675Total
                comprehensive (loss) income
            
            $
            (1,557
            )
            
            $
            10,725
            
            
            $
            8,887
            
            
            $
            15,455





**Note 4—Income
      taxes**





Income
      taxes are determined using an estimated annual effective tax rate. The provision
      for income taxes is less than the 35% U.S. federal statutory rate primarily
      due
      to lower tax rates in certain non-U.S. jurisdictions. The Company has valuation
      allowances against its deferred income taxes in the United States and all
      foreign jurisdictions other than its foreign subsidiaries in Taiwan and China.
      The valuation allowances have been calculated pursuant to Statement of Financial
      Accounting Standards No. 109,*Accounting for Income Taxes*, or
      SFAS 109, which requires an assessment of both positive and negative
      evidence when measuring the need for a valuation allowance. Such evidence
      includes the Company's past and projected future performance, the market
      environment in which the Company operates, the utilization of past tax credits
      and the length of the carry-back and carry-forward periods of net operating
      losses. The Company intends to maintain a valuation allowance until sufficient
      positive evidence as contemplated by SFAS 109 exists in future
      periods.





10
 ***Table
            of Contents***





Pursuant
      to Accounting Principles Board Opinion No. 23, *Accounting for
      Income Taxes-Special Areas*, or APB 23, the Company does not provide
      for federal income taxes or tax benefits on the undistributed earnings
      associated with the non-U.S. operations. In the event some or all of the
      earnings were distributed to the U.S. entity, some portion of the distribution
      would be subject to both U.S. income taxes and foreign withholding taxes.
      However, foreign tax credits may become available to reduce or eliminate the
      U.S. income tax liability.





Deferred
      taxes have not been provided on the excess book basis of shares of certain
      foreign subsidiaries in the amount of $44 million as of September 30, 2007
      because such basis differences are not expected to reverse in the foreseeable
      future. These basis differences arose primarily through undistributed book
      earnings of the Company’s subsidiaries. The basis differences could reverse
      through a sale of the subsidiaries, the receipt of dividends from the
      subsidiaries, as well as various other events. It is not practical to calculate
      the residual income tax which would result if these basis differences reversed
      due to the complexities of U.S. tax rules and regulations and the hypothetical
      nature of the calculations.





**Note 5—Commitments
      and contingencies**





***Lease
      Commitments***





In
      January 2007, the Company entered into a lease agreement for 298,050 square
      feet of office space at its existing principal office location in Walnut,
      California. The term of the lease commences on July 1, 2007 and runs
      through July 2014, subject to extension at the Company's option under
      certain circumstances. The future minimum lease payments required under this
      operating lease are $0.4 million for the remainder of 2007,
      $1.5 million in 2008, $1.6 million in 2009, $1.6 million in 2010,
      $1.7 million in 2011 and $4.6 million thereafter.  Rent
      expense related to this office space for the three and nine months ended
      September 30, 2007 was $0.4 million and $1.1 million, respectively.





In
      February 2007, the Company entered into a lease agreement for office space
      in
      London, United Kingdom. This lease expires in September 2018. The future minimum
      lease payments required under this operating lease are $0 for the remainder
      of
      2007, $0.9 million in 2008, $1.0 million in 2009, $1.0 million in 2010, $1.0
      million in 2011, and $7.6 million thereafter. Rent expense for the three and
      nine months ended September 30, 2007 was $0.3 million and $0.6 million,
      respectively.





***Litigation***





The
      Company is involved in various legal matters in the normal course of its
      business. While the outcome of these proceedings and claims cannot be predicted
      with certainty, the Company believes that the ultimate outcome of such matters
      will not harm its business, financial position, results of operations or cash
      flows.





On
      May 19, 2003, Commissariat a L'Energie Atomique, or CEA, filed a patent
      suit against Chi-Mei Optoelectronics Corporation, or CMO, Dell Computer
      Corporation, Samsung Electronics Co., Ltd., Samsung Electronics America, Inc.,
      Samsung Electronics Canada, Inc., Samsung International, Inc., Sun Microsystems,
      Inc., and ViewSonic Corporation in the U.S. District Court, District of Delaware
      (Case No. CV-03-484 KAJ), alleging infringement of two patents relating to
      the design and manufacture of LCD modules. The Company believes the allegations
      against it are based upon its incorporation of certain third-party LCD modules
      into its products. The Company has filed a motion to stay, which has been
      granted. While the outcome of this case cannot be predicted with certainty,
      the
      Company does not believe that the outcome will harm its business, financial
      position, results of operations or cash flows.





On
      May 27, 2004, LG. Philips LCD Co. Ltd., or LPL, filed a patent suit against
      Tatung Company, Tatung Company of America, Inc., and ViewSonic Corporation
      in
      the U.S. District Court, District of Delaware (Case No. CV-04-343 JJF),
      alleging infringement of two patents relating to the mounting of LCD panels.
      On
      October 5, 2007, LPL provided the Company with a covenant not to sue the Company
      or its customers for any claim of infringement of the mounting patents at issue
      in this suit.  This covenant not to sue ended LPL’s claims against the
      Company for direct liability for infringement of these patents and deprived
      the
      Court of subject matter jurisdiction to further adjudicate the claims and
      defenses with respect to the Company.  While the outcome of this case
      cannot be predicted with certainty, the Company does not believe that the
      outcome will harm its business, financial position, results of operations or
      cash flows.





On
      July 27, 2006, the jury in the trial of *LG. Philips LCD Co. Ltd.
      v. Tatung Company, Tatung Company of America, Inc., Chunghwa Picture
      Tubes Ltd., and ViewSonic Corporation*, pending in U.S. District Court,
      District of Delaware, (Case No. 05-292-JJF) delivered a verdict finding
      that each of the defendants, including the Company, had willfully infringed
      (through the doctrine of equivalents) a LPL patent relating to electrostatic
      discharge. The jury awarded monetary damages of $52.5 million against
      Chunghwa Pictures Tubes Ltd., or CPT, only. LPL has requested that the
      Court treble the damages based upon the finding of willful infringement, which
      could result in an additional $105 million in exemplary damages being
      awarded against CPT if the jury verdict is upheld. Since there is no damage
      award against the Company, there can be no exemplary damages awarded against
      the
      Company. If the jury verdict is upheld, the Court may, in its discretion, award
      attorneys’ fees to LPL and some portion of the attorneys’ fees may be charged
      against the Company. LPL also filed a motion seeking a permanent injunction
      but
      this motion was taken off calendar by the judge, who indicated he would not
      request completion of the briefing on that motion until he had ruled on the
      other post-trial motions challenging various aspects of the jury’s verdict and
      that are currently under submission. The patent-in-suit expires in July 2008.
      While the expiration date of the patent may weigh against entry of an
      injunction when that issue is taken up by the Court, it is still possible that
      an injunction will be entered. If an injunction is entered, it may require
      the
      Company to, among other things, change its sourcing of certain LCD displays
      or
      key components.  While the outcome of this litigation cannot be
      predicted with certainty, the Company does not believe that the outcome will
      harm its business, financial position, results of operations or cash
      flow.





11
 ***Table
            of Contents***





On
      November 21, 2006, the jury in the trial of *LG. Philips LCD
      Co. Ltd. v. Tatung Company, Tatung Company of America, Inc., and
      Chunghwa Picture Tubes Ltd.*  pending in the U.S. District
      Court, Central District of California, (Case No. CV-02-6775 CBM) delivered
      a
      verdict finding that each of the defendants (the Company is not a defendant)
      had
      willfully infringed two patents of LPL's relating to the design and manufacture
      of LCD modules. The parties to the case have briefed post-trial motions
      challenging various aspects of the jury's verdict and these motions have been
      taken under submission by the Court. However, the Company is a defendant in
      the
      related case,*LPL v. ViewSonic Corporation*, also pending in the U.S.
      District Court, Central District of California (Case No. CV-03-2886 CBM), in
      which LPL alleges infringement of the same patents asserted in Case No.
      CV-02-6775 CBM above as a result of the Company’s incorporation of CPT LCD's
      into its products. The Company’s suit had been consolidated with the CPT case
      for pre-trial purposes, during which infringement claims directed to four other
      LPL patents have been dismissed. The dismissals may be overturned on appeal.
      No
      trial date has been set in Case No. CV-03-2886 CBM and none is
      expected to be set as the patent issues have already been heard by the jury
      in
      the CPT case (Case No. CV-02-6775 CBM). If an injunction is entered against
      the
      CPT LCD panels, the Company may be required to change its sourcing of certain
      LCD displays. While the outcome of this litigation cannot be predicted with
      certainty, the Company does not believe that the outcome of the litigation
      against it (Case No. CV-03-2886) will harm its business, financial position,
      results of operations or cash flow.





On
      December 1, 2006, LPL filed a patent suit against CMO, AU Optronics
      Corporation, or AUO, AU Optronics Corporation America, Tatung Company, Tatung
      Company of America, Inc. and ViewSonic Corporation pending in the U.S.
      District Court, District of Delaware (Case No. 06-726-GMS), alleging
      infringement of the same three LPL patents that were found to be valid and
      infringed in the two cases referenced above, i.e., CV-02-6775 and 05-292 JJF.
      Presumably, as with the other LPL suits identified above, the allegations
      against the Company are based upon its incorporation of certain third-party
      LCD
      modules into its products. The Company has filed a motion for a more definite
      statement and motions to dismiss and /or strike the claims asserted in this
      case, as well as a motion to stay the litigation as to the
      Company.  LPL has, in a filed response to the Company’s motion to
      stay, stated that the infringement claims in this case are limited to those
      manufactured by AUO and CMO. While the outcome of this case cannot be predicted
      with certainty, the Company does not believe that the outcome will harm its
      business, financial position, results of operations or cash flows.





In
      2007,
      the Federal Communications Commission, or the FCC, notified the Company
      that it was investigating whether the Company may have violated certain FCC
      rules governing the importation and shipment of television receivers lacking
      the
      required digital television receiving capability.  In response to the
      FCC inquiry, the Company has provided the FCC with information regarding this
      matter.  The Company met with the FCC on September 11, 2007 to present
      its factors in mitigation. On October 10, 2007, the FCC and the Company entered
      into a second tolling agreement that will expire on December 15, 2007 unless
      sooner terminated by the issuance of a Notice of Apparent Liability or notice
      from the FCC that it has terminated its investigation. While it is not possible
      to predict the outcome with certainty, the Company does not believe that the
      outcome will harm its business, financial position, results of operations or
      cash flows.




***Laws,
      Regulations and Directives***




The
      Company is subject to local laws and regulations in the various regions in
      which
      the Company operates, including the United States and the European Union, or
      EU.
      In the United States, the Company is subject to rules enforced by the FCC
      regarding televisions containing high-definition tuners. The FCC has notified
      the Company that importation declarations indicate that it may have violated
      certain FCC rules with respect to the transition requirements for selling
      televisions containing high-definition tuners and may be subject to
      fines.  The Company must also comply with two particular EU
      directives. The first is the Restriction of Certain Hazardous Substances
      Directive, or RoHS, that restricts the distribution of certain substances,
      including lead, within the EU. The RoHS directive became effective July 1,
      2006. In addition to specifying the elimination and/or reduction in the level
      of
      specified hazardous materials from the manufacture of the Company's products,
      the Company must take reasonable measures to ensure that it is not being
      supplied with products containing the restricted chemical substances. The
      Company worked with suppliers to ensure that it met the July 1, 2006
      implementation date and today must continue to work with suppliers to
      ensure it meets its continuing obligation that products placed on the
      market from July 1, 2006 are RoHS compliant products. The second directive
      is the Waste Electrical and Electronic Equipment Directive, or WEEE, that became
      effective on August 13, 2005, and requires manufacturers or importers to
      provide a process of recycling all of its manufactured products or imports
      into
      the EU. Certain EU countries adopted WEEE on August 13, 2005. The majority
      of EU countries into which the Company's European region sells its products
      have
      now adopted the legislation. Certain countries have still to implement the
      WEEE
      directive. Certain countries, for example the United Kingdom and Spain, qualify
      the Company as a producer and allow the Company to register as a producer and
      join a compliance program. Where this is the case, ViewSonic Europe Limited
      has
      registered as a producer and has joined a compliance program thus complying
      with
      its obligations under WEEE. In other countries which do not allow the Company
      to
      register or where the Company does not qualify as a producer, the Company has
      taken steps to ensure that its distributors and resellers, to whom the WEEE
      compliance responsibility falls, are in compliance with WEEE. The Company does
      not believe that the continuing compliance with these directives will have
      a
      material effect on the Company’s business; however, failure to comply with its
      obligations under these directives may have a material effect on the Company’s
      business.





12
 ***Table
            of Contents***





**Note 6—Business
      segments**





During
      the third quarter of 2007, the Company realigned its operating segments to
      move
      the Middle East and Africa geographic territories from Europe (formerly EMEA)
      to
      Asia-MEA (formerly Asia-Pacific). In addition, the Company realigned its
      operating segments under a new methodology to allocate certain corporate
      overhead expenses and corporate benefits associated with its initiative to
      source LCD panels directly from the manufacturers to its operating segments
      during the fourth quarter of 2006.





In
      accordance with SFAS No. 131,*Disclosures about Segments of an
      Enterprise and Related Information*, the Company has determined it has three
      reportable segments: Americas, Europe, and Asia-MEA (Asia-Pacific, Middle-East
      and Africa).  The Company believes that this segment information
      provides useful information for analyzing the underlying business results.
      The
      Company sells similar products in its segments, including LCD displays, CRT
      displays, projectors, and LCD TVs. The type and class of customers, primarily
      distributors and resellers, are also similar across the product lines. The
      Company's management evaluates the performance of and allocates resources to
      its
      segments based on net sales and operating income. Assets and liabilities are
      not
      allocated by segment for management reporting purposes.





The
      following segment information for the three and nine months ended September
      30,
      2006 has been recast to conform to the 2007 presentation (in
      thousands):








**Three
                months ended September 30,**
            
            
            **Nine
                months ended September 30,****($
                in thousands)**
            
            **2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Net
                sales:Americas
            
            $
            163,742
            
            
            $
            192,638
            
            
            $
            542,468
            
            
            $
            533,023Europe
            
            
            78,584
            
            
            
            92,594
            
            
            
            236,078
            
            
            
            240,920Asia-MEA
            
            
            160,447
            
            
            
            141,213
            
            
            
            457,932
            
            
            
            358,564$
            402,773
            
            
            $
            426,445
            
            
            $
            1,236,478
            
            
            $
            1,132,507(Loss)
                income from operations(1):Americas
            
            $
            (5,033
            )
            
            $
            2,849
            
            
            $
            (3,391
            )
            
            $
            9,980Europe
            
            
            (842
            )
            
            
            4,863
            
            
            
            (793
            )
            
            
            (3,454
            )Asia-MEA
            
            
            3,940
            
            
            
            3,348
            
            
            
            12,905
            
            
            
            10,148Other(2)
            
            
            (31
            )
            
            
            1,414
            
            
            
            (444
            )
            
            
            (710
            )$
            (1,966
            )
            
            $
            12,474
            
            
            $
            8,277
            
            
            $
            15,964





(1)
            The
                nine months ended September
                30, 2007 includes
                gains related to the settlement of commercial litigation of $1.8
                million, $1.5
                million and $0.4 million in our Americas, EMEA and Asia-MEA region,
                respectively(see
                Note 10).


(2)
            Includes
                certain corporate expenses that were not allocated to a specific
                segment
                for management reporting purposes.





**Note 7—Warranty**





The
      Company provides product warranty programs on a worldwide basis that vary in
      term from 12 to 36 months. The length of the warranty period and the
      specific warranty coverage are based on the type of product. The Company accrues
      for estimated warranty costs at the time the product is sold. Estimates are
      primarily based on historical experience and other available information. The
      historical data used in estimating the warranty accrual includes net cost of
      repair (repair costs less reimbursements from suppliers), defect rates and
      total
      number of products under warranty.





13
 ***Table
            of Contents***





The
      following table summarizes activity in the Company's warranty liability for
      the
      nine months ended September 30, 2007 and 2006 (in thousands):








**Nine
                months ended September 30,**
            
            **Beginning
                accrued warranty liability**
            
            
            **Additions
                charged to expense**
            
            
            **Payments
                for units returned**
            
            
            **Adjustments (1)**
            
            
            **Ending
                accrued warranty liability****2007**
            
            $
            24,455
            
            
            $
            9,189
            
            
            $
            (11,610
            )
            
            $
            (1,969
            )
            
            $
            20,065**2006**
            
            $
            21,350
            
            
            $
            15,585
            
            
            $
            (9,765
            )
            
            $
            (2,293
            )
            
            $
            24,877







(1)
            The
                adjustmentswereprimarily due to lower defect
                rates experienced across all operating segments. In addition, lower
                repair
                costs and favorable changes in repair pattern have further
                reduced the Company's estimated
                liabilities.





**Note 8—(Loss)
      earnings per share**





The
      Company presents both basic and diluted (loss) earnings per common share, or
      EPS, amounts. Basic EPS is calculated by dividing net income by the
      weighted-average number of common shares outstanding during the period. Diluted
      EPS amounts are based upon the weighted-average number of common and potential
      common shares, including warrants outstanding during the period. Potential
      common shares are excluded from the computation in periods in which they
      have an anti-dilutive effect. The Company uses the treasury stock method to
      calculate the impact of outstanding stock options. Stock options for which
      the
      exercise price exceeds the average fair market value over the period have an
      anti-dilutive effect on EPS and, accordingly, are excluded from the calculation.
      On January 10, 2006, the Company redeemed all 7.5 million outstanding
      shares of Series B Preferred Stock and excluded such shares as it had an
      insignificant impact on the Company's 2006 earnings per share
      calculations.





The
      basic
      and diluted EPS was calculated in accordance with EITF
      03-06, *Participating Securities and the Two Class Method under SFAS
      No. 128.* The following is a reconciliation of the numerators and
      denominators of the basic and diluted net (loss) income per common share
      computations (in thousands, except per share data):





**Three
                months ended September 30,**
            
            
            **Nine
                months ended September 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Net
                (loss) income (1)
            
            $
            (1,713
            )
            
            $
            10,507
            
            
            $
            8,125
            
            
            $
            14,608Weighted
                average number of shares issued
            
            
            351,681
            
            
            
            354,326
            
            
            
            352,840
            
            
            
            354,173Stock
                options (2)
            
            
            -
            
            
            
            3,278
            
            
            
            7,168
            
            
            
            3,382Interest
                warrants (3)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,151Diluted
                shares
            
            
            351,681
            
            
            
            357,604
            
            
            
            360,008
            
            
            
            359,706(Loss)
                earnings per common share:Basic
            
            $
            -
            
            
            $
            0.03
            
            
            $
            0.02
            
            
            $
            0.04Diluted
            
            $
            -
            
            
            $
            0.03
            
            
            $
            0.02
            
            
            $
            0.04





(1) In
      accordance with EITF 03-06, net (loss) income includes the accretion for the
      mandatorily redeemable preferred stock. The EPS calculation
      reflects the allocation of net income between common stock and preferred
      stock. Net (loss) income of $0 and $76,000 were allocated
      to preferred stock for the three and nine months ended September 30, 2007,
      respectively, and have been excluded from the computation
      above. Income from continuing operations of $90,000 and $42,000 was allocated
      to
      preferred stock for the three and nine
      months ended September 30, 2006, respectively, and is excluded in the
      computation above.





(2) For
      the three and nine months ended September 30, 2007, 35.0 million
      shares and 9.1 million shares, respectively, were excluded from the diluted
      (loss) earnings per common share calculation because they were
      anti-dilutive. For the three and nine months ended September 30, 2006, 0.7
      million shares and 0.6 million shares, respectively, were excluded from the
      diluted earnings per common share calculation because they were
      anti-dilutive.





(3) For
      the three and nine months ended September 30, 2007, there were no
      warrants outstanding. For the three and nine months ended September 30, 2006,
      common stock issuable upon the exercise of outstanding warrants of 0.8 million
      and 5.2 million, respectively, were excluded from the diluted earnings per
      share
      calculation because they were anti-dilutive.





14
 ***Table
            of Contents***





**Note 9—Related
      party transactions**





The
      Company sells inventory to several related parties, which include a company
      where an officer is related to the principal stockholder. Net sales to these
      related parties were approximately $7.3 million and $20.3 million for the three
      and nine months ended September 30, 2007, respectively. The Company had
      receivables of approximately $1.9 million and $0.4 million from these related
      parties at September 30, 2007 and December 31, 2006, respectively, which
      are included in other receivables.





As
      of
      September 30, 2007, the Company had subordinated notes payable to trusts
      for the benefit of the children of its principal stockholder and related
      entities. The subordinated notes payable are not callable until the expiration
      date, April 12, 2008. The amount outstanding at September 30, 2007 and
      December 31, 2006 was $43.0 million. The interest rate on the subordinated
      notes
      payable was 3.97% for the three and nine months ended September 30, 2007.
      Interest expense related to this amount totaled $0.4 million and $1.3 million
      for the three and nine months ended September 30, 2007, respectively. The
      Company may be required to make payment on the subordinated notes payable due
      on
      April 12, 2008. The Company believes that its existing cash balances, credit
      facilities and anticipated cash flows from operations will be sufficient to
      meet
      its obligations.





**Note 10—Stockholders’
      equity**





On
      April
      20, 2007, the Company entered into a settlement agreement with a former vendor
      related to litigation over certain contractual rights and obligations related
      to
      commercial matters. The former vendor agreed to pay ViewSonic $2.0 million
      and
      return 3,000,000 shares of its common stock with a fair value of $1.7 million
      in
      connection with the settlement. During the three months ended June 30, 2007,
      the
      Company recognized a $3.7 million gain of which $3.0 million was recorded in
      cost of sales and $0.7 million included in selling, general and administrative
      expenses.  As of September 30, 2007, the Company had received the
      3,000,000 shares of its common stock, which were returned to authorized but
      unissued status, and had received the $2.0 million in cash.




The
        Company is currently contemplating public registration of its common stock
        and
        has capitalized $897,000 of IPO related costs. These costs may need to be
        expensed in the fourth quarter of 2007, if the Company does not complete
        the IPO
        process.




15
 ***Table
            of Contents***





**Management's
      discussion and analysis of
      financial**


**condition
      and results of operations**








*The
      following discussion and analysis of our financial condition and results of
      operations should be read together with our unaudited condensed consolidated
      financial statements and related notes in Part I, Item 1 of this Quarterly
      Report on Form 10-Q. This discussion and analysis contains forward-looking
      statements that involve risks, uncertainties and assumptions. You should review
      the Part II, Item 1A. "Risk factors"  for a discussion of important
      factors that could cause actual results to differ materially from the results
      described in or implied by the forward-looking statements described in the
      following discussion and analysis.*





*In
      this report, all references to “ViewSonic,” ”we,” “us,” or “our” mean ViewSonic
      Corporation and our subsidiaries.*





***Our
      company***





ViewSonic
      Corporation is a leading global provider of visual display products. We develop,
      market and support a broad range of innovative products including liquid crystal
      display, or LCD, monitors, LCD TVs, projectors, digital signage displays and
      other display products. We were founded in 1987 and have a 20 year history
      of providing innovative products with market leading technologies. We sell
      our
      products to businesses and consumers through a variety of channels, including
      distributors and resellers such as solution providers, value added resellers,
      traditional retailers and Internet retailers. We are a Fortune 1000 company,
      and
      our products are sold in over 100 countries.





Our
      strategy is to effectively leverage our scale, strong global brand, close
      supplier and channel relationships and market knowledge to introduce industry
      leading products and penetrate new markets. We collaborate with a network of
      world class component suppliers and contract manufacturers to deliver a wide
      array of display products for use in a variety of consumer and commercial
      applications. We believe our operating model allows us to quickly develop,
      introduce and ramp new products while maintaining an efficient cost
      structure.





***Financial
      operations overview***





In
      the
      third quarter of 2007, the display industry continued to experience shortages
      in
      LCD panel sizes resulting in increased panel prices compared to the first
      half of 2007. This resulted in higher product costs and reduced margins amid
      increased competition and soft demand, particularly in our Americas and Europe
      regions. However, our Asia-MEA region continued to experience growth through
      expansion of core product offerings across our LCD monitor and projector product
      lines, particularly in emerging markets. We continued to focus on our
      initiative to source LCD panels directly from manufacturers which has brought
      us
      closer to the supply base allowing us to more closely monitor market trends
      and
      supply cycles, and consolidate our LCD panel purchasing power. The benefits
      derived from our sourcing initiative are impacted by market conditions such
      as
      periods of oversupply and rapidly dropping average selling prices, or
      ASPs. We believe that, in periods of oversupply, the benefits of our LCD
      panel purchases are greater even though our ASPs generally decrease during
      such periods. In periods of short supply these benefits decline, but our
      ASPs generally increase to compensate for the decline.  We believe
      our sourcing initiative may help us to decrease the overall
      volatility of our gross margins over time, although we are unable to anticipate
      the degree to which we will realize these benefits. While end user demand
      for LCD monitors continues to be slow, we believe that panel prices will
      continue to increase over at least the next several months, resulting in
      increasingly challenging market conditions.




Total
      unit shipments increased 0.8% in the third quarter of 2007 compared to the
      third
      quarter of 2006. Unit shipments of our LCD TVs and projectors grew 15.6% and
      40.6%, respectively, in the third quarter of 2007 compared to the third quarter
      of 2006, while unit shipments of our LCD and CRT monitors declined 1.7% and
      24.2% in the third quarter of 2007 compared to the third quarter of 2006.
      The ASPs of our LCD monitors, LCD TVs, projectors and CRTs declined 1.6%, 28.8%,
      22.0% and 23.2%, respectively, in the third quarter of 2007 compared to the
      third quarter of 2006.





Net
      sales
      decreased $23.7 million, or 5.6%, to $402.8 million in the third quarter of
      2007
      from $426.4 million in the third quarter of 2006. The decrease was primarily
      due
      to lower sales in our Americas and Europe regions as a result of increased
      competition and soft demand. This decrease was partially offset by continued
      growth in our Asia-MEA region through expansion of core product offerings across
      our LCD monitor and projector product lines particularly in emerging markets.
      Income from operations decreased $14.4 million to a loss of $2.0 million in
      the
      third quarter of 2007 from income of $12.5 million in the third quarter of
      2006.
      This decrease was primarily due to the decline in net sales, lower gross margins
      of 7.7% in the third quarter of 2007 compared to 10.0% in the third quarter
      of
      2006 and higher selling, general and administrative expenses as a percentage
      of
      net sales, which increased to 8.2% in the third quarter of 2007 compared to
      7.0%
      in the third quarter of 2006.





16
 ***Table
            of Contents***





**Results
      of operations**





**Comparison
      of the three months ended September 30, 2007 and 2006**





The
      following table sets forth our condensed consolidated statements of operations
      for the periods indicated ($ in thousands)





**Three
                months ended September 30,****Increase
                (decrease)****2007**
            
            
            **2006**
            
            
            **$**
            
            
            
            **%**Net
                sales
            
            $
            402,773
            
            
            $
            426,445
            
            
            $
            (23,672
            )
            
            
            (5.6
            )%Cost
                of sales
            
            
            371,792
            
            
            
            383,992
            
            
            
            (12,200
            )
            
            
            (3.2
            )Gross
                profit
            
            
            30,981
            
            
            
            42,453
            
            
            
            (11,472
            )
            
            
            (27.0
            )Selling,
                general and administrative expenses
            
            
            32,947
            
            
            
            29,979
            
            
            
            2,968
            
            
            
            9.9(Loss)
                income from operations
            
            
            (1,966
            )
            
            
            12,474
            
            
            
            (14,440
            )
            
            
            *Other
                income (expense):Interest
                (expense) income, net
            
            
            (757
            )
            
            
            (366
            )
            
            
            (391
            )
            
            
            *Other
                income (expense), net
            
            
            1,626
            
            
            
            (651
            )
            
            
            2,277
            
            
            
            *Total
                other income (expense), net
            
            
            869
            
            
            
            (1,017
            )
            
            
            1,886
            
            
            
            *(Loss)
                income from continuing operations before income taxes
            
            
            (1,097
            )
            
            
            11,457
            
            
            
            (12,554
            )
            
            
            *Provision
                for income taxes
            
            
            616
            
            
            
            860
            
            
            
            (244
            )
            
            
            (28.4
            )Net
                (loss) income
            
            $
            (1,713
            )
            
            $
            10,597
            
            
            $
            (12,310
            )
            
            
            *


*
        Percentage not meaningful.





The
      following table sets forth our condensed consolidated statements of operations
      expressed as a percentage of net sales for the periods indicated:




**Three
                months ended September 30,**(1)**2007**
            
            
            **2006**Net
                sales
            
            
            100.0
            %
            
            
            100.0
            %Cost
                of sales
            
            
            92.3
            
            
            
            90.0Gross
                profit
            
            
            7.7
            
            
            
            10.0Selling,
                general and administrative expenses
            
            
            8.2
            
            
            
            7.0(Loss)
                income from operations
            
            
            (0.5
            )
            
            
            2.9Other
                income (expense):Interest
                (expense) income, net
            
            
            (0.2
            )
            
            
            (0.1
            )Other
                income (expense), net
            
            
            0.4
            
            
            
            (0.2
            )Total
                other income (expense), net
            
            
            0.2
            
            
            
            (0.2
            )(Loss)
                income from continuing operations before income taxes
            
            
            (0.3
            )
            
            
            2.7Provision
                for income taxes
            
            
            0.2
            
            
            
            0.2Net
                (loss) income
            
            
            (0.4
            )%
            
            
            2.5
            %


(1)
        May not total due to rounding differences.








***Net
      sales***





Net
      sales
      decreased $23.7 million, or 5.6%, to $402.8 million in the third quarter of
      2007
      from $426.4 million in the third quarter of 2006. The decrease was
      primarily due to lower sales in our Americas and Europe regions as a result
      of
      increased competition and soft demand. This decrease was partially offset by
      continued growth in our Asia-MEA region through expansion of core product
      offerings across our LCD monitor and projector product lines particularly in
      emerging markets. Total unit shipments increased 0.8% in the third quarter
      of
      2007 compared to the third quarter of 2006. Unit shipments of our LCD TVs and
      projectors grew 15.6% and 40.6%, respectively, in the third quarter of 2007
      compared to the third quarter of 2006, while unit shipments of our LCD and
      CRT
      monitors declined 1.7% and 24.2% in the third quarter of 2007 compared to
      the third quarter of 2006. The ASPs of our LCD monitors, LCD TVs, projectors
      and
      CRTs declined 1.6%, 28.8%, 22.0% and 23.2%, respectively, in the third quarter
      of 2007 compared to the third quarter of 2006. The decline in ASPs reflects
      the
      effects of competition, soft demand, and regional and product mix. Of the
      display products shipped in the third quarter of 2007, LCD monitors accounted
      for 78.9% and all other products accounted for 21.1% of units shipped compared
      to 80.9% and 19.1%, respectively, in the third quarter of 2006.





***Cost
      of sales***





17
 ***Table
            of Contents***





Cost
      of
      sales decreased $12.2 million, or 3.2%, to $371.8 million in the third quarter
      of 2007 from $384.0 million in the third quarter of 2006. As a percentage of
      net
      sales, cost of sales increased to 92.3% in the third quarter of 2007 from 90.0%
      in the third quarter of 2006. The increase in cost of sales as a percentage
      of
      net sales was primarily due to $3.6 million in higher inventory write-downs
      to
      net realizable value and higher product costs as a percentage of net sales
      of
      88.6% in the third quarter of 2007 compared to 86.7% in the third quarter of
      2006. This increase was partially offset by $2.3 million in lower warranty
      expenses as a result of improvements in our defect rates. Gross margin decreased
      to 7.7% in the third quarter of 2007 from 10.0% in the third quarter of
      2006.





***Selling,
      general, and administrative expenses***





Selling,
      general and administrative expenses increased $3.0 million, or 9.9%, to
      $32.9 million in the third quarter of 2007 from $30.0 million in the
      third quarter of 2006. The increase was primarily due to an increase in
      personnel-related costs of $1.6 million as a result of higher headcount, an
      increase in account development fund expenses of $1.0 million, the write-off
      of
      uncollectible trade receivables of $0.7 million and higher stock-based
      compensation expense of $0.3 million, partially offset by lower incentive
      compensation of $0.5 million and other net expenses of $0.1 million. As a
      percentage of net sales, selling, general and administrative expenses increased
      to 8.2% in the third quarter of 2007 from 7.0% in the third quarter of
      2006.





***Total
      other income (expense), net***





Total
      other income (expense), net, increased $1.9 million to income of $0.9 million
      in
      the third quarter of 2007 from an expense of $1.0 million in the third quarter
      of 2006. The increase was primarily due to higher foreign currency translation
      gains of $2.1 million and lower impairment charges on long-term investments
      of
      $0.6 million, partially offset by lower interest income of $0.2 million due
      to
      lower average cash balances held during the third quarter of 2007 compared
      to
      2006, higher interest expense of $0.2 million as a result of higher average
      loan
      balances outstanding during the third quarter of 2007 compared to the 2006,
      and
      $0.4 million in other net expenses.





***Provision
      for income taxes***





Our
      provision for income taxes decreased $0.2 million to $0.6 million in the third
      quarter of 2007 from $0.9 million in the third quarter of 2006. The estimated
      effective tax rate in the third quarter of 2007 was 56.2% provision on
      pre-tax losses compared to 7.5% on pre-tax income in the third quarter of 2006.
      The increase in the effective tax rate was primarily due to $6.6 million of
      deferred tax assets not recognized in our Americas region as a result of a
      full
      valuation allowance being recorded against such deferred tax
      assets.





**Comparison
      of the nine months ended September 30, 2007 and 2006**





The
      following table sets forth our condensed consolidated statements of operations
      for the periods indicated ($ in thousands):





**Nine
                months ended September 30,****Increase
                (decrease)****2007**
            
            
            **2006**
            
            
            **$**
            
            
            
            **%**Net
                sales
            
            $
            1,236,478
            
            
            $
            1,132,507
            
            
            $
            103,971
            
            
            
            9.2
            %Cost
                of sales(1)
            
            
            1,136,792
            
            
            
            1,029,640
            
            
            
            107,152
            
            
            
            10.4Gross
                profit
            
            
            99,686
            
            
            
            102,867
            
            
            
            (3,181
            )
            
            
            (3.1
            )Selling,
                general and administrative expenses(1)
            
            
            91,409
            
            
            
            86,903
            
            
            
            4,506
            
            
            
            5.2Income
                from operations
            
            
            8,277
            
            
            
            15,964
            
            
            
            (7,687
            )
            
            
            (48.2
            )Other
                income (expense):Interest
                (expense) income, net
            
            
            (1,656
            )
            
            
            (53
            )
            
            
            (1,603
            )
            
            
            *Other
                income (expense), net
            
            
            3,332
            
            
            
            970
            
            
            
            2,362
            
            
            
            243.5Total
                other income (expense), net
            
            
            1,676
            
            
            
            917
            
            
            
            759
            
            
            
            82.8Income
                from continuing operations before income taxes
            
            
            9,953
            
            
            
            16,881
            
            
            
            (6,928
            )
            
            
            (41.0
            )Provision
                for income taxes
            
            
            1,752
            
            
            
            2,183
            
            
            
            (431
            )
            
            
            (19.7
            )Net
                income
            
            
            8,201
            
            
            
            14,698
            
            
            
            (6,497
            )
            
            
            (44.2
            )Preferred
                stock accretion
            
            
            -
            
            
            
            (48
            )
            
            
            48
            
            
            
            *Net
                income available to common stockholders
            
            $
            8,201
            
            
            $
            14,650
            
            
            $
            (6,449
            )
            
            
            (44.0
            )%


*
        Percentage not meaningful.


(1)
      2007
      includes $3.0 million and $0.7 million of gains in cost of sales and selling,
      general and administrative, respectively, related to the settlement of
      commercial litigation.





18
 ***Table
            of Contents***





The
      following table sets forth our condensed consolidated statements of operations
      expressed as a percentage of net sales for the periods indicated:


**Nine
                months ended September 30,(1)****2007**
            
            
            **2006**Net
                sales
            
            
            100.0
            %
            
            
            100.0
            %Cost
                of sales
            
            
            91.9
            
            
            
            90.9Gross
                profit
            
            
            8.1
            
            
            
            9.1Selling,
                general and administrative expenses
            
            
            7.4
            
            
            
            7.7(Loss)
                income from operations
            
            
            0.7
            
            
            
            1.4Other
                income (expense):Interest
                (expense) income, net
            
            
            (0.1
            )
            
            
            -Other
                income (expense), net
            
            
            0.3
            
            
            
            0.1Total
                other income (expense), net
            
            
            0.1
            
            
            
            0.1(Loss)
                income from continuing operations before income taxes
            
            
            0.8
            
            
            
            1.5Provision
                for income taxes
            
            
            0.1
            
            
            
            0.2Net
                (loss) income
            
            
            0.7
            
            
            
            1.3


(1)
        May not total due to rounding differences.




***Net
      sales***





Net
      sales
      increased $104.0 million, or 9.2%, to $1,236.5 million in the first nine
      months of 2007 from $1,132.5 million in the first nine months of 2006. The
      increase was primarily due to continued growth in our Latin America and Asia-MEA
      emerging markets through expansion of core product offerings across our LCD
      monitor and projector product lines. This increase was partially offset by
      lower
      sales in our Europe region as a result of increased competition and soft demand.
      Total unit shipments increased 17.6% in the first nine months of 2007 compared
      to the first nine months of 2006. Unit shipments of our LCD monitors, LCD TVs
      and projectors grew 29.6%, 35.8% and 63.4%, respectively, in the first nine
      months of 2007 compared to the first nine months of 2006, while unit shipments
      of our CRT monitors declined 40.5% in the first nine months of 2007
      compared to the first nine months of 2006. The ASPs of our LCD monitors, LCD
      TVs, projectors and CRTs declined 10.8%, 30.5%, 18.4% and 16.4%, respectively,
      in the first nine months of 2007 compared to the first nine months of 2006.
      The
      decline in ASPs reflects the effects of competition, soft demand, and regional
      and product mix. Of the display products shipped in the first nine months of
      2007, LCD monitors accounted for 81.7% and all other products accounted for
      18.3% of units shipped compared to 75.8% and 24.2%, respectively, in the first
      nine months of 2006.





***Cost
      of sales***





Cost
      of
      sales increased $107.2 million, or 10.4%, to $1,136.8 million in the first
      nine
      months of 2007 from $1,029.6 million in the first nine months of 2006. As a
      percentage of net sales, cost of sales increased to 91.9% in the first nine
      months of 2007 from 90.9% in the first nine months of 2006. The increase in
      cost
      of sales as a percentage of net sales was primarily due to $3.1 million in
      higher inventory write-downs to net realizable value and higher product costs
      as
      a percentage of net sales of 88.5% in the first nine months of 2007 compared
      to
      87.1% in the first nine months of 2006. This increase was partially offset
      by
      $6.1 million in lower warranty expenses as a result of improvements in our
      defect rates and a $3.0 million gain related to the settlement of commercial
      litigation. Gross margin decreased to 8.1% in the first nine months of 2007
      from 9.1% in the first nine months of 2006.





***Selling,
      general, and administrative expenses***





Selling,
      general and administrative expenses increased $4.5 million, or 5.2%, to
      $91.4 million in the first nine months of 2007 from $86.9 million in
      the first nine months of 2006. The increase was primarily due an increase in
      personnel-related costs of $4.8 million as a result of higher headcount, an
      increase in account development fund expenses of $1.7 million, higher facilities
      expenses of $0.6 million, higher stock-based compensation expense of $0.3
      million and other net expenses of $0.9 million, partially offset by lower
      incentive compensation of $1.7 million, lower selling and marketing expenses
      of
      $1.4 million and a $0.7 million gain related to the settlement of commercial
      litigation. As a percentage of net sales, selling, general and administrative
      expenses decreased to 7.4% in the first nine months of 2007 from 7.7% in the
      first nine months of 2006 primarily resulting from our continued focus on
      streamlining our business processes to maximize operating
      efficiencies.





***Total
      other income (expense), net***





Total
      other income (expense), net, increased $0.8 million to $1.7 million in the
      first
      nine months of 2007 from $0.9 million in the first nine months of 2006. The
      increase was primarily due to lower impairment charges on long-term investments
      of $1.8 million and higher foreign currency translation gains of $1.0 million,
      partially offset by lower interest income of $0.8 million due to lower average
      cash balances held during the first nine months of 2007 compared to 2006, higher
      interest expense of $0.8 million as a result of higher average loan balances
      outstanding during the first nine months of 2007 compared to the first nine
      months of 2006 and $0.4 million in other net expenses.





19
 ***Table
            of Contents***





***Provision
      for income taxes***





Our
      provision for income taxes decreased $0.4 million to $1.8 million in the first
      nine months of 2007 from $2.2 million in the first nine months of 2006. The
      estimated effective tax rate as a percentage of pre-tax income increased to
      17.6% in the first nine months of 2007 compared to 12.9% in the first nine
      months of 2006. The increase in the effective tax rate was primarily due to
      $6.6
      million of deferred tax assets not recognized in our Americas region as a result
      of a full valuation allowance being recorded against such deferred tax
      assets.  In addition, the rate increase was offset in part by an
      increase in the proportion of income earned in jurisdictions having lower
      effective tax rates, particularly in Asia.





**Segment
      information**





We
      have
      three reportable segments: Americas, Europe, and Asia-MEA. We sell similar
      products in our segments, including LCD and CRT displays, LCD TVs, projectors
      and other products. The type and class of customers, primarily distributors
      and
      resellers, are also similar across the product lines. We have two major
      products: visual displays (LCD and CRT display monitors) and other
      products.





Our
      management evaluates and monitors segment performance primarily through net
      sales and income (loss) from operations. We do not allocate assets or
      liabilities by segment for management reporting purposes. During the third
      quarter of 2007, we realigned our operating segments to move the Middle East
      and
      Africa geographic territories from Europe (formerly EMEA) to Asia-MEA (formerly
      Asia-Pacific). In addition, we realigned our operating segments under a new
      methodology to allocate certain corporate overhead expenses and corporate
      benefits associated with our initiative to source LCD panels directly from
      LCD
      panel manufacturers to our operating segments during the fourth quarter of
      2006.
      We believe that this segment information provides useful information for
      analyzing the underlying business results. The following segment information
      for
      the three and nine months ended September 30, 2006 has been recast to conform
      to
      the 2007 presentation.








**Comparison
      of the three months ended September 30, 2007 and 2006**





**Three
                months ended September 30,**
            
            
            **Increase
                (decrease)****($
                in thousands)**
            
            **2007**
            
            
            **2006**
            
            
            **$**
            
            
            
            **%**Net
                sales:Americas
            
            $
            163,742
            
            
            $
            192,638
            
            
            $
            (28,896
            )
            
            
            (15.0
            )%Europe
            
            
            78,584
            
            
            
            92,594
            
            
            
            (14,010
            )
            
            
            (15.1
            )Asia-MEA
            
            
            160,447
            
            
            
            141,213
            
            
            
            19,234
            
            
            
            13.6$
            402,773
            
            
            $
            426,445
            
            
            $
            (23,672
            )
            
            
            (5.6
            )Income
                (loss) from operations(1):Americas
            
            $
            (5,033
            )
            
            $
            2,849
            
            
            $
            (7,882
            )
            
            
            (276.7
            )Europe
            
            
            (842
            )
            
            
            4,863
            
            
            
            (5,705
            )
            
            
            (117.3
            )Asia-MEA
            
            
            3,940
            
            
            
            3,348
            
            
            
            592
            
            
            
            17.7Other
            
            
            (31
            )
            
            
            1,414
            
            
            
            (1,445
            )
            
            
            *$
            (1,966
            )
            
            $
            12,474
            
            
            $
            (14,440
            )
            
            
            (115.8
            )%


(1)
        Includes certain corporate expenses that were not allocated to a specific
        segment for management reporting purposes.


*
      Percentage not meaningful.




**Americas**





***Net
      sales***





In
      our
      Americas region, net sales decreased $28.9 million, or 15.0%, to $163.7 million
      in the third quarter of 2007 from $192.6 million in the third quarter of 2006.
      The decrease was primarily due to increased competition and soft demand. LCD
      and
      CRT unit shipments declined 9.0% and 60.2%, respectively, in the third quarter
      of 2007 compared to the third quarter of 2006. We also experienced declining
      ASPs across all of our major product categories in the third quarter of 2007
      compared to the third quarter of 2006. This decrease was partially offset by
      higher unit shipments in our LCD TV and projector products of 30.1% and 22.8%,
      respectively.





20
 ***Table
            of Contents***





***(Loss)
      income from operations***





In
      our
      Americas region, loss from operations was $5.0 million in the third quarter
      of
      2007 compared to income of $2.8 million in the third quarter of 2006. The $7.9
      million decrease was primarily due to the decline in net sales, lower gross
      margins as a result of higher inventory write-downs to net realizable value
      and
      higher product costs as a percentage of net sales due to our ASPs declining
      at a
      faster rate than offsetting product cost improvements and higher selling,
      general and administrative expenses primarily due to higher account development
      fund expenses to promote our products in an extremely competitive environment.
      This decrease was partially offset by lower warranty expenses due to
      improvements in defect rates.





**Europe**





***Net
      sales***





In
      our Europe region, net sales
      decreased $14.0 million, or 15.1%, to $78.6 million in the third quarter of
      2007
      from $92.6 million in the third quarter of 2006. The decrease was primarily
      due
      to increased competition and soft demand. Our Europe region experienced declines
      in unit shipments across all major product categories. LCD, LCD TV, projectors
      and CRT unit shipments declined 14.5%, 57.3%, 6.1% and 52.3%, respectively,
      in
      the third quarter of 2007 compared to the third quarter of 2006. We also
      experienced declining ASPs in our LCD TV, projector and CRT products in the
      third quarter of 2007 compared to the third quarter of 2006. This decrease
      was
      partially offset by slightly higher ASPs in our LCD products.Foreign
      currency translation had a
      positive impact on our net sales in the third quarter of 2007 due to a 6%
      stronger Euro exchange rate against the U.S. dollar based on the average rate
      in
      the third quarter of 2007 compared to the third quarter of
      2006.





***(Loss)
      income from operations***





In
      our
      Europe region, loss from operations was $0.8 million in the third quarter of
      2007 compared to income of $4.9 million in the third quarter of 2006. The $5.7
      million decrease was primarily due to the decline in net sales, lower gross
      margins driven by higher product costs as a percentage of net sales and
      higher selling, general and administrative expenses primarily due an increase
      in
      personnel-related expenses as a result of an increase in headcount and the
      write-off of uncollectible trade receivables. This decrease was partially
      offset by lower warranty expenses due to improvements in defect rates and lower
      average repair costs.





**Asia-MEA**





***Net
      sales***





In
      our
      Asia-MEA region, net sales increased $19.2 million, or 13.6%, to $160.4 million
      in the third quarter of 2007 from $141.2 million in the third quarter of 2006.
      The increase was primarily due to growth through expansion of core product
      offerings across our LCD monitor and projector product lines particularly in
      Korea, India and Southeast Asia countries. Unit shipments of our LCD, LCD TV
      and
      projector products grew 13.3%, 35.2% and 228.4%, respectively, in the third
      quarter of 2007 compared to the third quarter of 2006. Foreign currency
      translation had a positive impact on our net sales in the second quarter of
      2007
      due to a 5% stronger Chinese Yuan exchange rate against the U.S. dollar based
      on
      the average rate in the third quarter of 2007 compared to the third quarter
      of
      2006. The increase was partially offset by a decrease in CRT unit shipments
      of
      10.6% in the third quarter of 2007 compared to the third quarter of
      2006.





***Income
      from operations***





In
      our
      Asia-MEA region, income from operations increased $0.6 million to $3.9 million
      in the third quarter of 2007 from $3.3 million in the third quarter of 2006.
      The
      increase was primarily due to the growth in net sales, a decrease in freight
      expenses, lower warranty expenses resulting from improvements in defect rates
      and increased leverage in selling, general and administrative expenses as a
      percentage of net sales. This increase was partially offset by lower gross
      margins as a result of geographic and product mix and higher product costs
      as a
      percentage of net sales, an increase in advertising expenses and an increase
      in
      personnel-related expenses as we continue to build our infrastructure to support
      our growing sales in the Asia-MEA markets.





21
 ***Table
            of Contents***





**Comparison
      of the nine months ended September 30, 2007 and 2006**





**Nine
                months ended September 30,**
            
            
            **Increase
                (decrease)****($
                in thousands)**
            
            **2007**
            
            
            **2006**
            
            
            **$**
            
            
            **%**Net
                sales:Americas
            
            $
            542,468
            
            
            $
            533,023
            
            
            $
            9,445
            
            
            
            1.8
            %Europe
            
            
            236,078
            
            
            
            240,920
            
            
            
            (4,842
            )
            
            
            (2.0
            )Asia-MEA
            
            
            457,932
            
            
            
            358,564
            
            
            
            99,368
            
            
            
            27.7$
            1,236,478
            
            
            $
            1,132,507
            
            
            $
            103,971
            
            
            
            9.2(Loss)
                income from operations(1):Americas
            
            $
            (3,391
            )
            
            $
            9,980
            
            
            $
            (13,371
            )
            
            
            (134.0
            )Europe
            
            
            (793
            )
            
            
            (3,454
            )
            
            
            2,661
            
            
            
            77.0Asia-MEA
            
            
            12,905
            
            
            
            10,148
            
            
            
            2,757
            
            
            
            27.2Other(2)
            
            
            (444
            )
            
            
            (710
            )
            
            
            266
            
            
            
            *$
            8,277
            
            
            $
            15,964
            
            
            $
            (7,687
            )
            
            
            (48.2
            )%





(1)
            2007
                includes gains related to the settlement of commercial litigation
                of $1.8
                million, $1.5 million and $0.4 million in our Americas, Europe and
                Asia-MEA region, respectively.


(2)
            Includes
                certain corporate expenses that were not allocated to a specific
                segment
                for management reporting purposes.


*
      Percentage not meaningful.




**Americas**





***Net
      sales***





In
      our
      Americas region, net sales increased $9.4 million, or 1.8%, to $542.5 million
      in
      the first nine months of 2007 from $533.0 million in the first nine months
      of
      2006. The increase was primarily due to growth in unit shipments in our LCD,
      LCD
      TV and projector products of 16.3%, 39.5% and 59.8%, respectively, driven by
      product competitiveness and pricing strategies designed to gain market share
      and
      increase channel diversification. This increase was partially offset by lower
      CRT unit shipments of 62.7% and lower ASPs in our LCD, LCD TV, projector and
      CRT
      products in the first nine months of 2007 compared to the first nine months
      of
      2006 as a result of increased competition and soft demand.




***(Loss)
      income from operations***





In
      our
      Americas region, loss from operations was $3.4 million in the first nine months
      of 2007 compared to income of $10.0 million in the first nine months of 2006.
      The $13.4 million decrease was primarily due to lower gross margins as a result
      of higher inventory write-downs to net realizable value and higher product
      costs
      as a percentage of net sales due to our ASPs declining at a faster rate than
      offsetting product cost improvements. This decrease was partially offset by
      the
      increase in net sales, gains related to the settlement of commercial litigation,
      lower warranty expenses due to improvements in defect rates and lower selling,
      general and administrative expenses due to a decrease in advertising expenses
      and lower incentive compensation as a result of lower operating
      performance.





**Europe**





***Net
      sales***





In
      our
      Europe region, net sales decreased $4.8 million, or 2.0%, to $236.1 million
      in
      the first nine months of 2007 from $240.9 million in the first nine months
      of
      2006. Unit shipments in our LCD, LCD TV and projector products grew 13.6%,
      51.3%
      and 38.7%, respectively, in the first nine months of 2007 compared to the first
      nine months of 2006. However, the growth in unit shipments was more than offset
      by declining ASPs across all major product categories primarily due to increased
      competition and soft demand. Foreign currency translation had a positive impact
      on our net sales in the first nine months of 2007 due to an 8% stronger Euro
      exchange rate against the U.S. dollar based on the average rate in the first
      nine months of 2007 compared to the first nine months of 2006.





***Loss
      from operations***





In
      our
      Europe region, loss from operations was $0.8 million in the first nine months
      of
      2007 compared to a loss of $3.5 in the first nine months of 2006. The $2.7
      million increase was primarily due to higher gross margins as a result of
      lower inventory write-downs and lower warranty costs due to improvements in
      defect rates, a decrease in selling and marketing expenses, lower incentive
      compensation as a result of lower operating performance, and gains related
      to
      the settlement of commercial litigation. The increase was partially offset
      by
      higher personnel-related expenses as a result of increased headcount, the
      write-off of uncollectible trade receivables and higher account development
      fund
      expenses in order to promote sales in a very competitive
      environment.





22
 ***Table
            of Contents***





**Asia-MEA**





***Net
      sales***





In
      our
      Asia-MEA region, net sales increased $99.4 million, or 27.7%, to $457.9 million
      in the first nine months of 2007 from $358.6 million in the first nine months
      of
      2006. The increase was primarily due to growth through expansion of core product
      offerings across our LCD and projector product lines driven by our
      continued growth in the China market and expanded efforts in Australia, Korea,
      India and Southeast Asia countries. Unit shipments of our LCD, LCD TV and
      projector products grew 55.2%, 17.2% and 110.2%, respectively, in the first
      nine
      months of 2007 compared to the first nine months of 2006. Foreign currency
      translation had a positive impact on our net sales in the first nine months
      of
      2007 due to a 5% stronger Chinese Yuan exchange rate against the U.S. dollar
      based on the average rate in the first nine months of 2007 compared to the
      first
      nine months of 2006. The increase was partially offset by a decrease in CRT
      unit
      shipments of 32.1% and lower ASPs across all major product
      categories.





***Income
      from operations***





In
      our
      Asia-MEA region, income from operations increased $2.8 million to $12.9 million
      in the first nine months of 2007 from $10.1 million in the first nine months
      of
      2006. The increase was primarily due to the increase in net sales, lower freight
      expenses, lower warranty expenses due to improvements in defect rates and gains
      related to the settlement of commercial litigation. This increase was partially
      offset by higher selling, general and administrative expenses as a result
      of higher account development fund expenses, higher selling and marketing
      expenses and higher personnel-related expenses as we continue to build our
      infrastructure to support our growing sales in the Asia-Pacific
      markets.








**Liquidity
      and capital resources**





*(in
                thousands)*
            
            **Nine
                months ended September 30,****2007**
            
            
            **2006**Net
                cash provided by (used in) operating activities
            
            $
            26,028
            
            
            $
            (10,688
            )Net
                cash (used in) provided by investing activities
            
            
            (7,028
            )
            
            
            306Net
                cash provided by (used in) financing activities
            
            
            6,027
            
            
            
            (19,651
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            635
            
            
            
            33Net
                increase (decrease) in cash and cash equivalents
            
            $
            25,662
            
            
            $
            (30,000
            )




As
      of
      September 30, 2007, we had cash and cash equivalents of $94.7 million.
      Our cash balances are held in numerous locations throughout the world. Most
      of
      the amounts held outside the United States can be repatriated to the United
      States, but under current law would be subject to U.S. federal income taxes,
      less applicable foreign tax credits. In certain countries, foreign exchange
      limitations limit the amount of cash that can be repatriated. Repatriation
      could result in additional U.S. federal income tax payments in future years.
      As
      of September 30, 2007, we had $73.6 million of cash and cash equivalents held
      outside of the United States.  Where local restrictions prevent an
      efficient inter-company transfer of funds, our intent is that cash balances
      would remain in the foreign country and we would meet U.S. liquidity needs
      through ongoing cash flows from operations, external borrowings or equity
      financing, or a combination of the foregoing. We utilize various tax planning
      and financing strategies in an effort to help ensure that our worldwide cash
      is
      available in the locations in which it is needed. We have available various
      credit lines in our Americas, Europe and Asia-MEA regions that we believe are
      adequate to meet our cash flow needs.





***Operating
      activities***





Cash
      provided by operating activities was $26.0 million in the first nine months
      of
      2007 compared to cash used in operating activities of $10.7 million in the
      first
      nine months of 2006. The increase in operating cash flow in the first nine
      months of 2007 was primarily due to net income and cash generated through
      working capital. Our cash conversion cycle decreased from ten days at
      December 31, 2006 to four days at September 30, 2007. Our days of sales
      outstanding increased from 41 days at December 31, 2006 to 48 days at September
      30, 2007 primarily due to a combination of our continued expansion into emerging
      markets which typically have longer average accounts receivable terms and a
      greater proportion of our sales being made in the last month of the third
      quarter of 2007 compared to the fourth quarter of 2006. Our days in inventory
      increased from 32 days at December 31, 2006 to 33 days at September 30, 2007.
      Our days of accounts payable outstanding increased from 63 days at December
      31,
      2006 to 77 days at September 30, 2007 primarily due to the timing of product
      purchases and when payments were made.





23
 ***Table
            of Contents***





Our
      days
      of sales outstanding, days in inventory and days of accounts payable outstanding
      include the effects of product component revenues and costs related to the
      sourcing of LCD components directly from manufacturers. Days of sales
      outstanding is calculated by dividing accounts receivable by average daily
      sales
      for the quarter. Days in inventory is calculated by dividing inventory by
      average daily cost of goods sold for the quarter. Days of accounts payable
      outstanding is calculated by dividing accounts payable by average daily cost
      of
      goods sold for the quarter. We believe this is a more accurate presentation
      of
      our cash conversion cycle. Product component revenues and costs are presented
      as
      a net amount as part of cost of sales in our condensed consolidated statements
      of operations.





***Investing
      activities***





Cash
      used
      in investing activities was $7.0 million in the first nine months of 2007
      compared to cash provided by investing activities of $0.3 million in the first
      nine months of 2006. The use of cash in the first nine months of 2007 was
      primarily due to additional cash outlays for building improvements, while the
      use of cash in 2006 was primarily due to the sales and purchases of short-term
      investments.





***Financing
      activities***





Cash
      provided by financing activities was $6.0 million in the first nine months
      of
      2007 compared to cash used in financing activities of $19.7 million in the
      first
      nine months of 2006. In the first nine months of 2007, we had net borrowings
      of
      $6.0 million compared to net repayments on borrowing of $4.9 million in the
      first nine months of 2006. In addition, we redeemed all outstanding shares
      of our Series B Preferred Stock for $15.0 million in the first nine months
      of
      2006.





**Credit
      facilities**





In
      the
      United States, we have a $60.0 million credit line that expires in
      March 2008. Advances bear interest at the prime rate plus 0.50% (8.25% and
      8.75% at September 30, 2007 and December 31, 2006, respectively) with
      interest payable monthly. All advances under the agreement are collateralized
      by
      substantially all of the assets of ViewSonic Americas. Under the agreement
      we
      are subject to various restrictive covenants, which, among other things, prevent
      us from declaring or paying dividends except in certain circumstances, limit
      capital expenditures and executive compensation and require us to maintain
      a
      minimum earnings before interest, taxes, depreciation and amortization amount.
      If James Chu, our Chairman of the Board and Chief Executive Officer, ceases
      to
      be actively engaged in our management or he and his affiliates, in the
      aggregate, do not own at least 51% of our issued and outstanding common stock
      we
      will be in default under the credit line. As of September 30, 2007 and December
      31, 2006, there were no outstanding balances on the line-of-credit. We may
      be
      unable to extend this credit facility or find a replacement facility on
      substantially similar terms.





In
      Europe, we have a $20.0 million line-of-credit facility with a financial
      institution that expires in December 2007. This line-of-credit is secured
      by trade receivables and inventory of ViewSonic Europe Limited. Advances bear
      interest at LIBOR plus 2.25% (7.97% and 7.58% as of September 30, 2007 and
      December 31, 2006, respectively). We are currently looking into additional
      credit facilities to meet our current and future working capital needs. There
      were no outstanding balances on the line-of-credit as of September 30, 2007
      and
      December 31, 2006. We may be unable to extend this credit facility or find
      a
      replacement facility on substantially similar terms.





Certain
      of our Asia subsidiaries have line-of-credit facilities with various financial
      institutions that expire through July 2008. These credit facilities are secured
      by certain of their assets and allow cash advances, letters of credit and bank
      guarantees. The aggregate borrowing limit was $16.5 million and $23.7 million
      at
      September 30, 2007 and December 31, 2006, respectively. These lines of credits
      had a weighted average interest rate of 5.22% and 7.23% at September 30, 2007
      and December 31, 2006, respectively. As of September 30, 2007 and
      December 31, 2006, there were outstanding cash advances of $6.4 million and
      $0.3 million, respectively.




We
      have
      subordinated notes payable to trusts for the benefit of the children of our
      principal stockholder and related entities. The subordinated notes payable
      are not callable until the expiration date, April 12, 2008. At September
      30, 2007 and December 31, 2006, the amounts outstanding were $43.0
      million. The interest rate on the subordinated notes payable was 3.97% as
      of September 30, 2007 and December 31, 2006. We may be required to make
      payment on the subordinated notes payable due on April 12, 2008. We believe
      that
      our existing cash balances, credit facilities and anticipated cash flows from
      operations will be sufficient to meet our obligations.





24
 ***Table
            of Contents***





As
      of
      September 30, 2007, we were in compliance with the covenants of all our
      borrowing arrangements.





**Off-balance
      sheet arrangements**





During
      the first nine months of 2007 and year ended December 31, 2006, we did not
      have
      any off-balance sheet arrangements or relationships with unconsolidated entities
      or financial partnerships, such as entities often referred to as structured
      finance or variable interest entities, which are typically established for
      the
      purpose of facilitating off-balance sheet arrangements or other contractually
      narrow or limited purposes.





**Contractual
      obligations**





Our
      2006
      Annual Report on Form 10-K contains a table that summarizes our known
      obligations to make future payments pursuant to certain contracts as of December
      31, 2006. Except as discussed below, there has been no material change in our
      contractual obligations and commitments since December 31, 2006 other than
      scheduled payments through September 30, 2007.





In
      January 2007, we entered into a lease agreement for 298,050 square feet of
      office space at our existing principal office location in Walnut, California.
      The term of the lease commences on July 1, 2007 and runs through July 2014,
      subject to extension at our option under certain circumstances. The future
      minimum lease payments required under this operating lease are $0.4
      million for the remainder of 2007, $1.5 million in 2008, $1.6 million in
      2009, $1.6 million in 2010, $1.7 million in 2011, and $4.6 million
      thereafter. Rent expense related to this office space for the three and
      nine months ended September 30, 2007 was $0.4 million and $1.1 million,
      respectively.





In
      February 2007, we entered into a lease agreement for office space in London,
      United Kingdom. This lease expires in September 2018. The future minimum lease
      payments required under this operating lease are $0 for the remainder of 2007,
      $0.9 million in 2008, $1.0 million in 2009, $1.0 million in 2010, $1.0 million
      in 2011, and $7.6 million thereafter. Rent expense related to this office space
      for the three and nine months ended September 30, 2007 was $0.3 million and
      $0.6
      million, respectively.





As
      of
      September 30, 2007, our total FIN 48 liability for uncertain tax positions
      was
      $3.2 million. We are unable to reasonably estimate the timing of future cash
      flows related to the $3.2 million.





**Seasonality**





The
      market for our products historically has experienced seasonal shifts in demand
      due to changes in buying patterns by our customers. Buying patterns vary
      geographically, and the impact on our operating results in a given period may
      vary depending on our actual or anticipated level of activity in the relevant
      region. For example, we tend to experience higher net sales in the second half
      of the year due to a strong buying season by large distributors and resellers
      attributable to the holiday season in the Americas. Our seasonality is
      moderated through slightly different seasonal variations in our three regions,
      as well as supply cycles, product cost competitiveness and product
      lines.





**Operating
      capital and capital expenditure requirements**





We
      believe that our existing cash balances, credit facilities and anticipated
      cash
      flows from operations will be sufficient to meet our operating, acquisition
      and
      capital requirements for at least the next 12 months. However, there is no
      assurance that we will not need to raise additional equity or debt financing
      within this time frame. We also may require additional capital for other
      purposes not presently contemplated. If we are unable to obtain sufficient
      capital, we could be required to curtail capital equipment purchases, which
      could harm our business. Factors that could affect our cash used or generated
      from operations and, as a result, our need to seek additional borrowings or
      capital include:





·
            Differences
                between payment terms
                for the purchase of key components and the sale of finished
                products;


·
            Early-pay
                or pre-pay arrangements
                to secure lower pricing and capacity of key components or finished
                products;


·
            Decreased
                demand and market
                acceptance for our products;


·
            Inability
                to successfully develop
                our next-generation
                products;


·
            Competitive
                pressures resulting
                in lower than expected average selling
                prices;


·
            An
                adverse change in payment
                terms with our customers or our suppliers;
                or


·
            New
                product announcements or
                product introductions by our
                competitors.





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**Critical
      accounting policies and estimates**




Our
      critical accounting policies reflecting our estimates and judgments are
      described in Part II, Item 7, *Management’s Discussion and Analysis of
      Financial Condition and Results of Operations*, in our Annual Report on
      Form 10-K for the year ended December 31, 2006, filed with the
      Securities and Exchange Commission on March 16, 2007. We have not changed those
      policies since such date.





**Item
      3. Quantitative and qualitative disclosure about market
      risk**





Our
      financial market risk arises from fluctuations in foreign currencies. A majority
      of our net sales, expense and capital purchasing activities are transacted
      in
      U.S. dollars. However, we do enter into these transactions in other currencies,
      primarily the Euro, Chinese Renminbi, and certain other Asian currencies. Our
      net sales and purchasing transactions denominated in currencies other than
      the
      U.S. dollar are subject to exchange rate fluctuations and could potentially
      negatively impact our financial results.





We
      have
      significant European and Asia-MEA net sales denominated in the Euro and Chinese
      Renminbi. Product shipping, and selling, general and administrative expenses
      associated with a portion of these sales are U.S. dollar-denominated. During
      the
      third quarter and first nine months of 2007, the Euro-to-U.S. dollar foreign
      currency exchange rate strengthened against the U.S. dollar increasing 6% and
      8%, respectively, compared to the average during the third quarter and first
      nine months of 2006. The strengthening of the Euro positively impacted our
      net
      sales and income from operations by $1.7 million and $1.0 million,
      respectively, in the third quarter of 2007 and $6.6 million and
      $4.0 million, respectively, in the first nine months of 2007 over the prior
      year assuming all other factors remained constant. During the third quarter
      and
      first nine months of 2007, the Chinese Renminbi-to-U.S. dollar foreign currency
      exchange rate strengthened against the U.S. dollar increasing 5% compared to
      the
      average during the third quarter and first nine months of 2006. The
      strengthening of the Chinese Renminbi positively impacted our net sales and
      income from operations by $4.0 million and $3.8 million, respectively,
      in the third quarter of 2007 and $10.2 million and $9.5 million,
      respectively, in the first nine months of 2007 over the prior year assuming
      all
      other factors remained constant. As of September 30, 2007, 24% of our
      accounts receivable balance was denominated in currencies other than the
      U.S. dollar. Historically, sales of our products have benefited from
      effects of the weakening U.S. dollar, which make our products more affordable
      in
      several markets. We buy a majority of our products from our suppliers in U.S.
      dollars and sell a significant amount of our products in other foreign
      currencies. However, in periods of a strengthening U.S. dollar, our revenues
      measured in U.S. dollars are negatively impacted, while our cost of sales
      remains fairly constant, resulting in lower gross profit. In addition, we must
      manage our account receivables and inventory balances in order to limit our
      foreign currency exposure to a strengthening U.S. dollar. We are currently
      in
      the process of evaluating various foreign currency hedging strategies to
      minimize the effects of foreign currency fluctuations on our
      operations.





**Item
      4. Controls and procedures**




***Evaluation
      of Disclosure Controls and Procedures***




Based
      on
      their evaluation as of the end of the period covered by this report, our Chief
      Executive Officer and Chief Financial Officer have concluded that our disclosure
      controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
      the Securities Exchange Act of 1934, as amended) were effective.





We
      maintain “disclosure controls and procedures,” as such term is defined in Rule
      13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended,
      or
      the Exchange Act. Our management, including our Chief Executive Officer and
      Chief Financial Officer, does not expect that our disclosure controls and
      procedures or our internal controls will prevent all error and all fraud. A
      control system, no matter how well conceived and operated, can provide only
      reasonable, not absolute, assurance that the objectives of the control
      system are met. Further, the design of a control system must reflect the
      fact that there are resource constraints, and the benefits of controls must
      be
      considered relative to their costs. These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdowns
      can occur because of a simple error or mistake. Additionally, controls can
      be
      circumvented by the individual acts of some persons, by collusion of two or
      more
      people, or by management override of the control. The design of any system
      of controls also is based in part upon certain assumptions about the likelihood
      of future events, and there can be no assurance that any design will succeed
      in
      achieving its stated goals under all potential future conditions; over time,
      controls may become inadequate because of changes in conditions, or the degree
      of compliance with the policies or procedures may deteriorate.





***Changes
      in Internal Controls over Financial Reporting***





There
      were no changes in our internal controls over financial reporting during the
      quarter ended September 30, 2007 that have materially affected, or are
      reasonably likely to materially affect, our internal controls over financial
      reporting.





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**Part
      II**





**Other
      information**





**Item
      1.  Legal proceedings**





On
      May 19, 2003, Commissariat a L'Energie Atomique, or CEA, filed a patent
      suit against Chi-Mei Optoelectronics Corporation, or CMO, Dell Computer
      Corporation, Samsung Electronics Co., Ltd., Samsung Electronics America, Inc.,
      Samsung Electronics Canada, Inc., Samsung International, Inc., Sun Microsystems,
      Inc., and ViewSonic Corporation in the U.S. District Court, District of Delaware
      (Case No. CV-03-484 KAJ), alleging infringement of two patents relating to
      the design and manufacture of LCD modules. We believe the allegations against
      us
      are based upon our incorporation of certain third-party LCD modules
      into our products. We have filed a motion to stay, which has been granted.
      While the outcome of this case cannot be predicted with certainty, we do not
      believe that the outcome will harm our business, financial position, results
      of
      operations or cash flows.





On
      May 27, 2004, LG. Philips LCD Co. Ltd., or LPL, filed a patent suit against
      Tatung Company, Tatung Company of America, Inc., and ViewSonic Corporation
      in
      the U.S. District Court, District of Delaware (Case No. CV-04-343 JJF),
      alleging infringement of two patents relating to the mounting of LCD panels.
      On
      October 5, 2007, LPL provided us with a covenant not to sue us or our customers
      for any claim of infringement of the mounting patents at issue in this
      suit.  This covenant not to sue ended LPL’s claims against us for
      direct liability for infringement of these patents and deprived the Court of
      subject matter jurisdiction to further adjudicate the claims and defenses with
      respect to ViewSonic.  While the outcome of this case cannot be
      predicted with certainty, we do not believe that the outcome will harm our
      business, financial position, results of operations or cash flows.





On
      July 27, 2006, the jury in the trial of *LG. Philips LCD Co. Ltd.
      v. Tatung Company, Tatung Company of America, Inc., Chunghwa Picture
      Tubes Ltd., and ViewSonic Corporation*, pending in U.S. District Court,
      District of Delaware, (Case No. 05-292-JJF) delivered a verdict finding
      that each of the defendants, including us, had willfully infringed (through
      the
      doctrine of equivalents) a LPL patent relating to electrostatic discharge.
      The
      jury awarded monetary damages of $52.5 million against Chunghwa Pictures
      Tubes Ltd., or CPT, only. LPL has requested that the Court treble the
      damages based upon the finding of willful infringement, which could result
      in an
      additional $105 million in exemplary damages being awarded against CPT if
      the jury verdict is upheld. Since there is no damage award against us, there
      can
      be no exemplary damages awarded against us. If the jury verdict is upheld,
      the
      Court may, in its discretion, award attorneys’ fees to LPL and some portion of
      the attorneys’ fees may be charged against us. LPL also filed a motion seeking a
      permanent injunction but this motion was taken off calendar by the judge, who
      indicated he would not request completion of the briefing on that motion until
      he had ruled on the other post-trial motions challenging various aspects of
      the
      jury’s verdict and that are currently under submission. The patent-in-suit
      expires in July 2008. While the expiration date of the patent may weigh
      against entry of an injunction when that issue is taken up by the Court, it
      is
      still possible that an injunction will be entered. If an injunction is entered,
      it may require us to, among other things, change our sourcing of certain LCD
      displays or key components.  While the outcome of this litigation
      cannot be predicted with certainty, we do not believe that the outcome will
      harm
      our business, financial position, results of operations or cash
      flow.





On
      November 21, 2006, the jury in the trial of *LG. Philips LCD
      Co. Ltd. v. Tatung Company, Tatung Company of America, Inc., and
      Chunghwa Picture Tubes Ltd.* pending in the U.S. District Court,
      Central District of California, (Case No. CV-02-6775 CBM) delivered a verdict
      finding that each of the defendants (we are not a defendant) had willfully
      infringed two patents of LPL's relating to the design and manufacture of LCD
      modules. The parties to the case have briefed post-trial motions challenging
      various aspects of the jury's verdict and these motions have been taken under
      submission by the Court. However, we are a defendant in the related case,*LPL v. ViewSonic Corporation*, also pending in the U.S. District Court,
      Central District of California (Case No. CV-03-2886 CBM), in which LPL alleges
      infringement of the same patents asserted in Case No. CV-02-6775 CBM above
      as a
      result of our incorporation of CPT LCD's into our products. Our suit had been
      consolidated with the CPT case for pre-trial purposes, during which infringement
      claims directed to four other LPL patents have been dismissed. The dismissals
      may be overturned on appeal. No trial date has been set in Case
      No. CV-03-2886 CBM and none is expected to be set as the patent issues
      have already been heard by the jury in the CPT case (Case No. CV-02-6775 CBM).
      If an injunction is entered against the CPT LCD panels, we may be required
      to
      change our sourcing of certain LCD displays. While the outcome of this
      litigation cannot be predicted with certainty,  we do not believe that
      the outcome of the litigation against us (Case No. CV-03-2886) will harm our
      business, financial position, results of operations or cash flow.





On
      December 1, 2006, LPL filed a patent suit against CMO, AU Optronics
      Corporation, or AUO, AU Optronics Corporation America, Tatung Company, Tatung
      Company of America, Inc. and ViewSonic Corporation pending in the U.S.
      District Court, District of Delaware (Case No. 06-726-GMS), alleging
      infringement of the same three LPL patents that were found to be valid and
      infringed in the two cases referenced above, i.e., CV-02-6775 and 05-292 JJF.
      Presumably, as with the other LPL suits identified above, the allegations
      against us are based upon oour incorporation of certain third-party LCD modules
      into our products. We have filed a motion for a more definite statement and
      motions to dismiss and /or strike the claims asserted in this case, as well
      as a
      motion to stay the litigation as to us.  LPL has, in a filed response
      to our motion to stay, stated that the infringement claims in this case are
      limited to those manufactured by AUO and CMO. While the outcome of this case
      cannot be predicted with certainty, we do not believe that the outcome will
      harm
      our business, financial position, results of operations or cash
      flows.





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In
      2007,
      the Federal Communications Commission, or the FCC, notified us that it was
      investigating whether we may have violated certain FCC rules governing the
      importation and shipment of television receivers lacking the required digital
      television receiving capability.  In response to the FCC inquiry, we
      have provided the FCC with information regarding this matter.  We met
      with the FCC on September 11, 2007 to present our factors in mitigation. On
      October 10, 2007, the FCC and we entered into a second tolling agreement that
      will expire on December 15, 2007 unless sooner terminated by the issuance of
      a
      Notice of Apparent Liability or notice from the FCC that it has terminated
      its
      investigation. While it is not possible to predict the outcome with certainty,
      we do not believe that the outcome will harm our business, financial position,
      results of operations or cash flows.





In
      the
      ordinary course of business, we are involved in lawsuits, claims,
      investigations, proceedings, and threats of litigation consisting of
      intellectual property, commercial, employment and other matters. While the
      outcome of these proceedings and claims cannot be predicted with certainty,
      we
      believe that the ultimate outcome of such matters will not harm our business,
      financial position, results of operations or cash flows.





**Item
      1A.  Risk factors**




**Factors
      that may affect our business and financial results**





*The
      risks described below are not exhaustive of the risks that might affect our
      business. Other risks, including those we currently deem immaterial, may also
      impact our business. Any of the following risks could materially and adversely
      affect our business operations, results of operations and financial
      condition.*





Risks
      related to our business







***Our
      revenue and profitability are likely to fluctuate from period to period and
      are
      often difficult to predict for particular periods due to factors beyond our
      control. If we are unable to sustain our growth rate or manage any future growth
      effectively our financial results could suffer and our stock price could
      decline.***







You
      should not rely on our operating results for any prior quarterly or annual
      periods as an indication of our future operating performance. If we are unable
      to achieve future levels of revenue or operating income as anticipated by
      investors or analysts, our stock price could decline.




Our
      results of operations for any quarter or year are not necessarily indicative
      of
      results to be expected in future periods. Our operating results have
      historically been, and are expected to continue to be, subject to quarterly
      and
      yearly fluctuations as a result of a number of factors, including:




·
              The
                  introduction and market acceptance of new technologies or products
                  by us
                  or our competitors;
  ·
              Variations
                  in product costs and the mix of regional contribution and products
                  sold;
  ·
              Adverse
                  changes in the supply of components such as LCD panels, including
                  oversupply and undersupply;
  ·
              The
                  size and timing of product orders, which, in turn, will often depend
                  upon
                  the success of our distributors and resellers, business or specific
                  products;
  ·
              Changes
                  in our pricing policies or those of our
                  competitors;
  ·
              Adverse
                  changes in the conditions in the markets for display
                  products;
  ·
              The
                  size and timing of capital expenditures by commercial end user
                  customers;
  ·
              Our
                  inventory practices and those of our distributors and
                  resellers;
  ·
              The
                  level of returns or price protection we experience in a given
                  period;
  ·
              Conditions
                  in the broader markets for information
                  technology;
  ·
              Adverse
                  changes in the credit quality of our customers and
                  suppliers;
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  ·
              The
                  impact of acquired businesses and technologies;
                  and
  ·
              Changes
                  in the terms of our contracts with our customers or
                  suppliers.


These
      factors could harm our business and operating results.




***We
      derive a large percentage of our revenue from sales of LCD monitors and any
      decline in demand for these products could harm our ability to generate
      revenue.***





We
      derive
      a large percentage of our revenue from sales of LCD monitors. We are therefore
      particularly vulnerable to fluctuations in demand for LCD monitors, whether
      as a
      result of consumer preferences, market demand, competition, product
      obsolescence, technological change, budget constraints of consumers or other
      factors. If our revenue derived from sales of LCD monitors were to decline
      significantly, our business and operating results would be adversely affected.
      Replacement of older CRT monitors with LCD monitors has been one of the factors
      driving our sales of LCD monitors, and such replacement is largely
      complete.





The
      market for LCD monitors has historically experienced significant shifts in
      production capacity and LCD panel pricing caused by suppliers entering or
      leaving the market or increasing capacity for certain panel sizes. Demand
      patterns also vary seasonally and geographically based on consumer demand,
      product pricing and other factors. We are also subject to competition from
      competing display technologies as well as emerging or future display
      technologies. The success of competing display technologies could substantially
      reduce the demand for our LCD monitors.





***Our
      industry is highly competitive and price competition may significantly reduce
      our revenues and profits.***





Competitive
      factors in the LCD display industry include product features, price, product
      quality, breadth and reliability, price and performance characteristics, end
      user support, marketing and channel capability as well as corporate reputation
      and brand strength. We have substantial experience competing in the LCD monitor
      market. However, we are a new entrant to the LCD TV market and, therefore,
      we
      are just beginning to establish our competitive position. We believe that
      competition will have the effect of continually reducing the average selling
      price, or ASP, of our products over time. The average selling price, or ASP,
      of
      our LCD monitors declined 1.6% in the third quarter of 2007 compared to the
      third quarter of 2006 and declined 10.8% in the first nine months of 2007
      compared to the first nine months of 2006. We expect price competition to
      increase in future periods and such price competition may significantly reduce
      our revenues and gross margins in future periods.





The
      display provider industry has low barriers to entry and we expect new
      competitors to emerge. In the LCD monitor market and other commercial product
      markets we compete with PC manufacturers and other branded display companies.
      In
      the LCD TV market we compete with traditional TV manufacturers and established
      consumer electronic companies, as well as more recent entrants to the branded
      LCD TV market. In contrast, in the manufacturing and development portion of
      the
      display provider industry, the need to make significant capital equipment and
      research and development expenditures has caused higher barriers to entry.
      A
      significant increase in the number of display providers coupled with a
      relatively fixed number of suppliers could result in increased supply costs
      or
      diminished capacity, both of which could harm our business.





Some
      of
      our competitors have substantially longer operating histories, greater assets
      and name recognition, as well as greater financial, marketing, technical and
      other resources, than we do. Due to vertical integration and other factors,
      some
      of our competitors may have lower operating costs than we do. These advantages
      may allow our competitors to, among other things: undertake more extensive
      marketing initiatives, implement and sustain more aggressive pricing, obtain
      more favorable pricing or allocations from suppliers or cross subsidize their
      display operations from their other operations. Consequently, our products
      may
      not remain competitive relative to those of our competitors. To the extent
      we
      are unable to effectively compete against our competitors for any of these
      reasons or otherwise, our business would be harmed.





***The
      ASP of our products typically decreases over the life of the product, which
      can
      negatively affect our gross margin.***





The
      markets in which we compete are subject to technological advances with frequent
      new product releases and price competition. As a result, the price at which
      we
      can sell our products typically declines over the life of the products. The
      ASPs
      of our LCD monitors declined 1.6% in the third quarter of 2007 compared to
      the
      third quarter of 2006 and declined 10.8% in the first nine months of 2007
      compared to the first nine months of 2006.  These decreases were
      primarily due to increased production capacities of LCD panel manufacturers,
      aggressive price competition and product mix. In recent years, the decline
      in
      the ASP for LCD monitors has been faster than the decline in our
      product-sourcing costs and this has resulted in decreased margins. If ASPs
      continue to decline, our revenue and gross margins could decline.





In
      order
      to prevent excessive erosion of our gross margins, we need to continually manage
      our product costs and our inventory. To manage product costs, we must
      collaborate with our contract manufacturers to engineer the most cost-effective
      design for our products. In addition, we must carefully manage the price paid
      for components used in our products, as well as our freight and inventory
      holding costs. We also need to continually introduce new products with more
      attractive sales prices and gross margins in order to maintain our overall
      gross
      margins. We may not be able to reduce our product costs when there is a shortage
      of key components or when component prices otherwise rise. If we are unable
      to
      manage the cost of older products or successfully introduce new products with
      higher gross margins, our net sales will decrease and our gross margins will
      decline to an even greater degree than we have experienced in the
      past.





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We
      seek
      to mitigate the risk of declining ASPs by obtaining promotional pricing
      incentives from our contract manufacturers. A supplier's willingness to give
      us
      a pricing incentive and the amount of the pricing incentive are typically based
      on the competitiveness of the market, the volatility of the price of our key
      product components and the quantity of historical purchases


of
      these
      components from suppliers. Pricing incentives generally do not require us to
      commit to future component purchases from suppliers. We record the reimbursement
      from our vendors for these promotional pricing incentives when we are released
      by the supplier from legal liability for the payment of the product purchases.
      If we are unable to obtain promotional pricing incentives or if these incentives
      are discontinued, our gross margins may decline and our business could be
      harmed.





***Our
      operating expenses are relatively fixed and we may have limited ability to
      reduce expenses quickly in response to any revenue shortfalls or declines in
      product demand.***





Our
      operating costs are relatively fixed and we can adjust them downward only over
      a
      period of several quarters. As we typically recognize a substantial portion
      of
      our revenues in the last month of each quarter, we may not be able to adjust
      our
      variable operating expenses in a timely manner in response to any revenue
      shortfalls. Our inability to reduce operating expenses quickly in response
      to
      revenue shortfalls or declines in product demand would negatively impact our
      financial results.





The
      market for our products historically has experienced seasonal shifts in demand
      due to changes in buying patterns by our customers. Buying patterns vary
      geographically, and the impact on our operating results in a given period may
      vary depending on our actual or anticipated level of activity in the relevant
      region. We tend to experience higher net sales in the second half of the year
      due to a strong buying season by distributors and resellers attributable to
      the
      holiday season in the Americas. Our seasonality is moderated through slightly
      different seasonal variations in our three regions.





***If
      we are unable to license third-party technology our ability to offer competitive
      products could be harmed and our cost of sales could
      increase.***





We
      have
      no patented technology. We rely on third parties to obtain non-exclusive
      software license rights to technologies that are incorporated into and necessary
      for the operation and functionality of our products. We also license technology
      necessary to comply with various data compression, broadcast and wireless
      standards. Because the intellectual property we license is available from third
      parties, barriers to entry for our competitors are lower than if we owned
      exclusive rights to the technology we license and use or if we had separately
      developed patented technology. In some cases, the owners of the intellectual
      property that we license routinely license the same intellectual property to
      our
      competitors. If a competitor enters into an exclusive arrangement with any
      of
      our third-party technology providers, our ability to develop and sell products
      containing that technology could be severely limited. Our licenses often require
      royalty payments or other consideration to third parties. Our success will
      depend in part on our continued ability to have access to these technologies
      on
      commercially reasonable terms. If we are unable to license the necessary
      technology, we may be forced to acquire or develop alternative technologies
      of
      lower quality or performance standards. This could limit and delay our ability
      to offer competitive products and increase our costs of production. As a result,
      our gross margins, market share and operating results could be
      harmed.





***Intellectual
      property litigation and infringement claims could cause us to incur significant
      expenses or prevent us from selling our products.***





Many
      of
      our products are designed to include software or other intellectual property
      we
      non-exclusively license from third parties. Competitors' protected technologies
      may be unavailable to us or be made available to us only on unfavorable terms
      and conditions. It may be necessary in the future to seek or renew licenses
      relating to various aspects of our products. We may not be able to obtain or
      renew from third parties the licenses that we need on commercially reasonable
      terms, or at all. There are a large number of patents in our field and new
      patents issue frequently. We do not attempt to determine in advance whether
      a
      product or any of its components infringe the patent rights of
      others.





We
      frequently receive claims alleging infringement of patents or other intellectual
      property rights and expect to continue to receive such claims. We are currently
      involved in several such proceedings. Many cases involve multiple products
      and
      multiple providers as defendants. In other cases we may and have been the only
      defendant. Pursuant to our agreements with our suppliers and manufacturers,
      we
      generally seek indemnification in connection with such claims, but such
      indemnification is not available in all cases and we may only partially recover
      the costs we incur in defending such claims. In addition, we regularly enter
      into distribution agreements that include indemnification provisions under
      which
      we could be subject to costs and/or damages in the event of an infringement
      claim against us or an indemnified third party and which could harm our
      business. Any claim of infringement by a third party, even one without merit,
      could cause us to incur substantial costs defending against such claim and
      could
      distract our management from running our business. Furthermore, a party making
      such a claim, if successful, could secure a judgment that requires us to pay
      substantial damages. A judgment could also include a permanent injunction or
      other court order that would prevent us from offering one or more products.
      In
      addition, we might be required to seek a license for the use of such
      intellectual property, which may not be available on commercially reasonable
      terms, or at all. Alternatively, we may be required to develop or obtain access
      to non-infringing technology, which would require significant effort and expense
      and may ultimately be unsuccessful. Additionally, in recent years individuals
      and groups have begun purchasing intellectual property assets for the sole
      purpose of making claims of infringement and attempting to extract settlements
      from target companies. Any of these events could harm our business.





30
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***We
      order components and tooling in advance of anticipated customer demand. If
      we
      are unable to correctly predict fluctuations in component supply and demand,
      our
      business will be harmed.***





Substantially
      all of our sales are made on the basis of purchase orders rather than long-term
      agreements. As a result, we generally commit to purchase products without having
      received advance purchase commitments from our distributors and resellers.
      Our
      inventory purchases are made based upon future demand forecasts. These forecasts
      are based upon assumptions about future product demand that may prove to be
      inaccurate. Because we typically need sufficient lead-time in purchasing our
      products, we may not be able to reduce our purchase commitments in a timely
      manner in response to any reductions in our forecasts or in the level of
      purchase orders from distributors or resellers. In addition, the LCD display
      industry is characterized by rapidly fluctuating supply levels and pricing
      due
      to changes in production capacity, seasonality, purchasing levels by large
      suppliers and other factors. If we are unable to accurately predict or adapt
      to
      changes in LCD pricing, supply or demand, we may purchase an excess of materials
      at a high price or fail to purchase sufficient materials at a low price. If
      there is a higher incidence of inventory obsolescence of LCD panels or other
      product components, rapidly changing technology and customer requirements or
      an
      increase of the supply of products in the marketplace, we could be subject
      to
      excess or obsolete inventories or under­utilized tooling. If any of these
      events occur, we could be required to take corresponding inventory write-downs
      or tooling write-offs, which would impair our financial results and our gross
      margins.





***If
      we do not effectively manage and predict our sales channel inventory and product
      mix, we may incur inventory write downs or lose sales from having too few
      products or the wrong mix of products.***





If
      we are
      unable to properly monitor, control and manage our sales channel inventory
      and
      maintain an appropriate level and mix of products with our distributors and
      resellers and within our sales channels, we may incur increased and unexpected
      costs associated with our inventory. We must manage inventory held by our
      distributors and resellers because inventory held by them could result in
      excessive returns and lower our future revenue and gross margin. Distributors
      and resellers may increase orders during periods of product shortages in order
      to ensure adequate allocation, cancel orders if their inventory is too high
      or
      delay orders in anticipation of new products. They may also adjust orders based
      on competitor product introductions and incentives and seasonal buying patterns.
      Further, our distributors and resellers sell our competitors' products as well
      as ours and may have an incentive to exercise greater efforts to sell our
      competitors' products. We generally allow distributors and resellers to return
      a
      limited amount of our products in exchange for other products. Under our price
      protection policy, subject to certain conditions, if we reduce the list price
      of
      a product, we issue a credit in an amount equal to the reduction for each of
      the
      products held in inventory by our distributors and resellers. If our
      distributors and resellers are unable to sell their inventory in a timely
      manner, we may lower the price of the products, or these parties may exchange
      the products for newer products. If demand for our products falls, we could
      have
      excess inventory and be unable to sell such excess inventory in a timely manner
      and may need to reduce the prices on our products or, alternatively, we could
      end up with too few products and be unable to satisfy demand. If these events
      occur, we could incur increased expenses associated with writing off excessive
      or obsolete inventory or lose sales.





***If
      we are unable to effectively manage our component and material requirements
      among our third-party component suppliers and contract manufacturers, we may
      experience delays in the manufacturing of our products and the costs of our
      products may increase.***





We
      provide our third-party component suppliers and contract manufacturers with
      a
      rolling forecast of demand, which they use to determine their material and
      component requirements. Lead times for ordering materials and components vary
      significantly and depend on various factors, such as the specific supplier,
      contract terms and demand and supply for a component at a given time. Although
      the cost of key components tends to vary inversely with the supply of these
      components, conditions of over-supply can still be associated with higher costs
      and conditions of shortage can still be associated with lower costs. Some of
      our
      components have long lead times. Regardless of the accuracy of our forecasts,
      our contract manufacturers may be unable to meet our product timing, volume
      and
      price requirements. Alternatively, our contract manufacturers may be unable
      to
      utilize the components they have purchased. The cost of the components used
      in
      our products tends to drop rapidly as volumes increase and the technologies
      mature. Therefore, if our contract manufacturers are unable to promptly use
      components purchased on our behalf, our cost of producing products may be higher
      than that of our competitors, due to an over-supply of higher-priced components.
      If they are unable to use certain components, we may need to reimburse them
      for
      any losses they incur.





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***Our
      implementation of strategic initiatives may strain our operations and increase
      our operating expense.***





We
      have
      implemented strategic initiatives designed to focus our resources on improving
      supply chain and logistics efficiency, simplifying our business processes to
      maximize operating efficiencies, growing sales in regional markets and expanding
      core product offerings. We will continue to explore additional opportunities
      to
      improve operating efficiencies. The undertaking of these initiatives may strain
      our existing management, information systems, employee workforce, operational
      capability and financial controls or may adversely affect our ability to
      effectively work with suppliers, contract manufacturers, distributors or
      resellers. If we fail to successfully implement these initiatives or encounter
      unexpected difficulties during their implementation, we may not be successful
      in
      reducing costs, or we may adversely impact our ability to increase product
      offerings and increase revenues, in either case harming our
      business.





***We
      are subject to risks associated with our worldwide operations, which may harm
      our business.***





We
      generated 70% of our total consolidated net sales from customers outside of
      the
      United States in the third quarter of 2007 and 66% in the first nine months
      of
      2007. Sales to customers outside the United States subject us to a number of
      risks associated with conducting business internationally including the
      following:





•
            International
                economic and political conditions;





•
            Changes
                in, or impositions of, legislative or regulatory requirements; • Duties,
                tariffs or other barriers to trade;





•
            Delays
                or additional costs resulting from the need for permits or export
                licenses
                for certain technology;





•
            Exchange
                controls or changes in exchange rates which could make our products
                more
                expensive;





•
            Tax
                laws, regulations and treaties, including U.S. taxes on foreign operations
                and repatriation of funds;





•
            Longer
                payment cycles for sales in foreign countries and difficulties in
                collecting accounts receivable; and





•
            Additional
                burdens in complying with a variety of foreign
                laws.





Any
      one
      of the foregoing factors could cause our business, operating results and
      financial condition to suffer.





We
      have
      recently implemented an international structure designed to reflect our global
      operations and address the various tax regimes in which we operate. Future
      changes in international and U.S. tax laws, regulations and treaties, or the
      failure of our international structure to operate or be treated as expected,
      could increase our effective tax rate and result in additional tax
      liabilities.





***Our
      operating results may be harmed by fluctuations in foreign currency exchange
      rates.***


Historically,
      sales of our products have benefited from effects of the weakening U.S. dollar,
      which make our products more affordable in several markets. We buy a majority
      of
      our products from our suppliers in U.S. dollars and sell a significant amount
      of
      our products in other foreign currencies. However, in periods of a strengthening
      U.S. dollar, our revenues measured in U.S. dollars are negatively impacted,
      while our cost of sales remains fairly constant, resulting in lower gross
      profit. In addition, we must manage our account receivables and inventory
      balances in order to limit our foreign currency exposure to a strengthening
      U.S.
      dollar.





Hedging
      foreign currencies can be difficult, especially if the currency is not freely
      traded. We do not currently engage in any hedging transactions and we cannot
      predict the impact of future exchange rate fluctuations on our operating
      results.





***If
      disruptions in our transportation network occur or our shipping costs
      substantially increase,****our operating expense could increase
      and our financial results could be negatively
      impacted.***





We
      are
      highly dependent upon the transportation systems we use to ship our products,
      including surface, ocean and airfreight and on the operations of the Port of
      Los
      Angeles. Our attempt to closely match our inventory levels to our product demand
      intensifies the need for our transportation systems to function effectively
      and
      without delay. The transportation network is subject to disruption from a
      variety of causes, including labor disputes or port strikes, acts of war or
      terrorism and natural disasters. If our delivery times increase unexpectedly
      due
      to these or any other reasons, our inability to deliver products on time could
      result in delayed or lost revenue. In addition, our transportation costs will
      likely continue to increase due to increased fuel prices. A prolonged
      transportation disruption or a significant increase in the cost of freight
      could
      severely disrupt our business and harm our operating results.





32
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            of Contents***





***If
      we do not succeed in executing our growth strategies in our target international
      markets, our revenues may not increase.***





Our
      strategies include further expansion of our business in international markets
      in
      which we currently operate, including Brazil, China, India, Russia and Eastern
      Europe. In many of these markets, we face barriers in the form of long-standing
      relationships between our potential customers and their local suppliers, as
      well
      as protective regulations. In addition, pursuing international growth
      opportunities may require us to make significant investments long before we
      realize returns on the investments, if any. Increased investments may result
      in
      expenses growing at a faster rate than revenues. Our overseas investments in
      current and targeted international markets could be adversely affected
      by:




·
              Reversals
                  or delays in the opening of foreign markets to new
                  participants;
 
 ·
              Economic
                  instability, such as higher interest rates and inflation, which
                  could
                  reduce our customers' ability to obtain financing for consumer
                  electronics
                  or which could make our products more expensive in those
                  countries;
 
 ·
              Difficulties
                  hiring and retaining employees;
 
 ·
              Employment
                  and severance issues, including possible employee turnover or labor
                  unrest;
 
 ·
              Restrictions
                  on foreign investment or the repatriation of profits or invested
                  capital;
 
 ·
              Nationalization
                  of local industries;
 
 ·
              Changes
                  in export or import restrictions, duties and
                  tariffs;
 
 ·
              Transportation
                  delays or interruptions and other effects of less developed
                  infrastructures;
 
 ·
              Potential
                  loss of proprietary information as a result of piracy, misappropriation
                  or
                  laws that may be less protective of our intellectual property rights
                  than
                  those in the United States;
 
 ·
              Difficulties
                  in coordinating the activities of our geographically dispersed
                  and
                  culturally diverse operations;
 
 ·
              Changes
                  in the tax system or rate of taxation in the countries where we
                  do
                  business; and
 
 ·
              Economic,
                  social, political and perceived or actual health
                  risks.




For
      example, in the fourth quarter of 2005, Russia, unexpectedly, temporarily
      prohibited and then delayed the importation of LCD and CRT monitors resulting
      in
      lost sales and inventory write-downs.





In
      addition, difficulties in international financial markets and economies,
      particularly in emerging markets, could adversely affect demand from customers
      in the affected countries. Because of these factors, we may not succeed in
      expanding our business in international markets. This could hurt our business
      growth prospects and results of operations.





***If
      we fail to maintain and/or expand our sales channels, our revenue may
      decline.***





To
      maintain and grow our market share, sales and brand, we must maintain and expand
      our sales channels. We currently sell our products through distributors and
      resellers. We have no minimum purchase commitments or long-term contracts with
      any of these third parties. Our agreements are generally non-exclusive and
      generally may be terminated by either party, at its discretion, with 30 days
      notice.





Retailers
      have limited shelf space and promotional budgets, and competition is intense
      for
      these resources. A competitor with more extensive product lines and stronger
      brand identity may have greater bargaining power with these retailers. The
      competition for retail shelf space is expected to increase, which will require
      us to increase our marketing expenditures to maintain current levels of retail
      shelf space. As we are a relatively new entrant to the LCD TV market, we must
      also convince retailers of the value of our offerings for the LCD TV market.
      If
      we fail to secure retail shelf space for our LCD TVs we will lose sales of
      such
      products to our competitors, as most LCD TVs are sold through this
      channel.





33
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We
      must
      also continuously monitor and evaluate emerging sales channels. If we fail
      to
      establish a presence in an important developing sales channel, our business
      could be harmed. If we are unable to establish relationships in emerging sales
      channels, our sales could decline and we would lose market share.





***We
      rely on a limited number of distributors and resellers for most of our sales,
      and changes in price, purchasing or return patterns and failure to maintain
      or
      establish new distributor and reseller relationships in existing and new sales
      channels could lower our revenue or gross margins.***





We
      sell
      our products through distributors such as Ingram Micro Inc., Tech Data
      Corporation and SYNNEX Corporation, and resellers, such as solution providers,
      value added resellers, traditional retailers and Internet retailers. We expect
      that a majority of our net sales will continue to come from sales to a
      relatively small number of customers for the foreseeable future.  No
      single customer represented over 10% of our consolidated net sales in the third
      quarter and first nine months of 2007. We have no minimum purchase commitments
      or long-term contracts with any of our distributors or resellers. Our
      distributors and resellers could decide at any time to discontinue, decrease
      or
      delay their purchases of our products.





In
      addition, the prices that distributors and resellers pay for our products are
      subject to negotiation and change frequently. If any of our major distributors
      or resellers change their purchasing patterns or refuse to pay the prices that
      we set for our products, our net sales and operating results could be negatively
      impacted. If our distributors and resellers increase the size of their product
      orders without sufficient lead time for us to process the order, our ability
      to
      fulfill product demand would be compromised. In addition, because our accounts
      receivable are concentrated within a small group of distributors and resellers,
      the failure of any of them to pay on a timely basis, or at all, would reduce
      our
      cash flow.





We
      generally recognize revenue to distributors and resellers when risk of loss
      is
      transferred to such third party. To the extent that return rates from our
      customers or price protection exceed historical averages, revenues from future
      periods will be reduced.





***We
      depend on a limited number of third-party component suppliers and contract
      manufacturers for the manufacture of our products. If these third parties
      experience any delay, disruption or quality control problems in their
      operations, we could lose market share and revenues, and our reputation may
      be
      harmed.***





All
      of
      our products are manufactured, assembled, tested and packaged by contract
      manufacturers, as we have no manufacturing or testing facilities. We rely on
      component suppliers and contract manufacturers to procure components and, in
      some cases, subcontract engineering work. There are a limited number of
      manufacturers of LCD panels, and we do not expect this number to increase
      significantly. Some of our products are manufactured by a single contract
      manufacturer. Our component suppliers and contract manufacturers are primarily
      located in mainland China, Taiwan and Thailand and may be subject to disruption
      by earthquakes, typhoons and other natural disasters, epidemics, pandemics,
      as
      well as political, social or economic instability. We do not have any long-term
      contracts with any of these third-party component suppliers and contract
      manufacturers. Product pricing is generally negotiated on an order-by-order
      basis. Our contracts with our component suppliers and contract manufacturers,
      including those contracts containing provisions that may be materially favorable
      to us, are generally terminable for any reason and by either party with 90
      days
      notice. If our component suppliers and contract manufacturers encounter
      financial or other business difficulties, if their strategic objectives change,
      or if they perceive us to no longer be an attractive customer, they may no
      longer assist us in our product development efforts, and our business could
      be
      harmed.


The
      loss
      of the services provided by any of our primary contract manufacturers or a
      change in material terms could cause a significant disruption in operations,
      delays in product shipments and an adverse impact on our cash flow. Qualifying
      a
      new contract manufacturer and commencing volume production is expensive and
      time
      consuming.





Our
      reliance on third-party component suppliers and contract manufacturers also
      exposes us to the following risks over which we have limited or no
      control:





•
            Inability
                to procure key required components for our finished products to meet
                customer demand;





•
            Loss
                of access to capacity from one or more panel manufacturers or increased
                competition if such manufacturers elect to directly provide display
                devices to distributors, resellers or in other
                markets.





•
            Unexpected
                increases in manufacturing and repair
                costs;





•
            Unexpected
                reductions in payment terms;





•
            Interruptions
                in shipments if one of our manufacturers is unable to complete production
                or experiences delays;





34
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            of Contents***





•
            Inability
                to control the quality of finished
                products;





•
            Inability
                to control delivery schedules;





•
            Inability
                to obtain favorable pricing;





•
            Unpredictability
                of manufacturing yields; and





•
            Potential
                lack of adequate capacity to manufacture all or some of the products
                we
                require.





***If
      our new products fail to achieve broad market acceptance on a timely basis
      we
      will not be able to compete effectively and we will be unable to increase or
      maintain net sales and gross margins.***





We
      operate in a highly competitive, quickly changing environment. We are dependent
      upon sufficient demand and broad market acceptance for LCD display products.
      Our
      future success depends on our ability to develop and introduce new products
      and
      product enhancements that achieve broad market acceptance in the business and
      home markets. Our future success will depend in large part upon our ability
      to:





•
            Identify
                demand trends in the business and home display markets and quickly
                develop, manufacture and sell products that satisfy these
                demands;




•
            Manage
                our cost structure to enable us to bring new products to market at
                competitive prices;





•
            Respond
                effectively to new product announcements from our competitors by
                designing
                competitive products, either internally or through the use of third
                parties;





•
            Provide
                compatibility and interoperability of our products with products
                offered
                by other vendors and new technologies as they
                emerge;





·
            Efficiently
                access the display technology needed for our products to have broad
                market
                acceptance and respond rapidly to shifts in the display technology
                towards
                new or different display
                technologies;





·
            Manage
                our product offerings either as stand-alone products or in combination
                with other products or services, or in some other manner;
                and





·
            Respond
                effectively to unexpected shifts in market demand towards display
                and PC
                products sold together under the same brand or away from stand-alone
                displays.





***If
      a different or new display technology other than LCD achieves broad market
      acceptance and we are unable to shift to this new or different display
      technology, our business could be harmed.***





Most
      of
      our revenue is currently derived from the sale of products utilizing LCD display
      technology. Different technologies are also currently available and these
      include plasma, Liquid Crystal on Silicon and Organic Light Emitting Diode.
      New
      display technologies are under development and may be commercialized in the
      future. Our success will depend in part on our continued ability to offer
      products utilizing a display technology that has broad market appeal on
      commercially reasonable terms. If we are unable to shift or obtain the necessary
      technology, we may be forced to acquire or develop alternative technology of
      lower quality or performance standards. This could limit and delay our ability
      to offer competitive products and increase our costs of production. If a
      different or new display technology proves to have broad market acceptance
      and
      we are unable to access or bring to market products using this new or different
      display technology, we could lose market share and our revenue, gross margins
      and operating results could be harmed.





***Confidentiality
      agreements with employees and others may not adequately prevent disclosure
      of
      proprietary information.***





We
      generally enter into confidentiality and invention assignment agreements with
      our employees and contractors, and nondisclosure agreements with our
      distributors, resellers, suppliers and contract manufacturers to limit access
      to, and disclosure of, our proprietary information. These agreements may not
      effectively prevent disclosure of confidential information and may not provide
      an adequate remedy in the event of unauthorized disclosure of confidential
      information. In addition, others may independently discover our trade secrets
      and proprietary information, and in such cases we could not assert any trade
      secret rights against such party. Costly and time consuming litigation could
      be
      necessary to enforce and determine the scope of our proprietary rights, and
      failure to obtain or maintain trade secret protection could adversely affect
      our
      competitive business position.





35
 ***Table
            of Contents***





***Our
      products are complex and may require modifications to resolve undetected errors
      or unforeseen failures, which could lead to an increase in our warranty claims
      and costs, a loss of customers, or a decline in market acceptance of our
      products.***





Our
      products are complex and may contain undetected errors or experience unforeseen
      failures when first introduced or as new versions are released. These errors
      could cause us to incur significant warranty and re-engineering costs, divert
      the attention of our engineering personnel from product development efforts,
      and
      cause significant customer relations and business reputation problems. We also
      have received, and expect to continue to receive, claims alleging the sale
      by us
      of defective products. If we deliver products with defects, our credibility
      and
      the market acceptance and sales of our future products could be harmed. Defects
      could also lead to liability for defective products as a result of lawsuits
      against us or against our distributors and resellers. We also agree to indemnify
      our distributors and resellers in some circumstances against liability from
      defects in our products. A successful product liability claim could require
      us
      to make significant damages payments.





***Changes
      in the way we do business and volatility in our industry could require us to
      raise additional capital.***





Although
      we believe that our existing cash balances, credit facilities, anticipated
      cash
      flows from operations and the net proceeds of this offering will be sufficient
      to meet our operating and capital requirements for at least the next 12 months,
      we may be required to raise additional capital through either equity or debt
      financing, which may not be available on favorable terms, or at all. Factors
      that could adversely affect our cash used or generated from operations and,
      as a
      result, our need to seek additional borrowings or capital include:





•
            Differences
                between payment terms for the purchase of key components and the
                sale of
                finished products;





•
            Need
                to enter into early-pay or pre-pay arrangements to secure lower pricing
                and capacity for key components or finished
                products;





•
            Significantly
                decreased demand for and market acceptance of our
                products;





•
            Need
                to make significant investments in order to successfully develop
                our
                next-generation products;





•
            Competitive
                pressures resulting in lower than expected average selling
                prices;




•
              Adverse
                  changes in component pricing or payment terms with our distributors
                  and
                  resellers or our contract manufacturers and suppliers;
                  or





•
            Acquisitions
                of businesses or complementary
                technologies.





We
      also
      may require additional capital for other purposes not presently contemplated.
      If
      we are unable to obtain sufficient capital, we could be required to curtail
      our
      sales and marketing expenditures, which could harm our business. If we should
      require capital in excess of our current availability and if we were unable
      to
      raise additional capital, our business could be harmed.





***If
      we fail to comply with government regulations, including those promulgated
      by
      the Federal Communications Commission, the European Union's Restriction of
      Certain Hazardous Substances Directive, or RoHS, and Waste Electrical and
      Electronic Equipment Directive, or WEEE, our business may be
      harmed.***





We
      are
      subject to local laws and regulations in various regions in which we operate.
      We
      could become subject to liabilities as a result of a failure to comply with
      applicable laws and incur substantial costs from complying with existing, new,
      modified or more stringent requirements. For instance, in the United States
      we
      are subject to rules enforced by the Federal Communications Commission, or
      FCC,
      regarding televisions containing high-definition tuners. The FCC has notified
      us
      that importation declarations indicate that we may have violated certain FCC
      rules with respect to the transition requirements for selling televisions
      containing high-definition tuners and may be subject to fines.





In
      the
      European Union, or EU, there are two particular directives, RoHS and WEEE,
      which
      we believe may have a material impact on our business. RoHS restricts the
      distribution of certain substances, including lead, within the EU and became
      effective on July 1, 2006. RoHS requires us to eliminate and/or reduce the
      level
      of specified hazardous materials from our products and requires us to maintain
      and publish a detailed list of all chemical substances in our products. WEEE
      requires us to take back and recycle all products we manufacture or import
      into
      the EU at our own expense and became effective in August 2005 for most EU
      countries and at varying dates thereafter for other EU countries whose
      implementation of the European WEEE Directive was subsequent to August 2005.
      The
      United Kingdom is the most recent country to implement the WEEE Directive and
      its regulations became effective in January 2007. If we fail to, or do not
      fully, comply with the EU directives our business may be harmed. For
      example,





36
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            of Contents***





·
            We
                may be unable to procure appropriate RoHS compliant material in sufficient
                quantity and quality and/or be unable to incorporate it into our
                product
                procurement processes without compromising product quality and/or
                harming
                our cost structure;





·
            We
                may not be able to sell non-compliant products into the EU or to
                any
                customer whose end products will be sold into the EU, which may result
                in
                reduced sales; or





·
            We
                may face excess and obsolete inventory risk related to non-compliant
                inventory that we may continue to hold for which there is reduced
                demand
                and we may need to write down such
                inventory.





***We
      depend on our founder and other executive officers, and if we are not able
      to
      retain them, our business will suffer.***





James
      Chu, our founder, Chairman of the Board, Chief Executive Officer and majority
      stockholder and other executive officers, possess specialized knowledge with
      respect to our business and our operations. Consequently, the loss of Mr. Chu,
      in particular, and our other executive officers could harm our business. We
      do
      not carry key man life insurance on any of our executive officers.





***Any
      acquisition we make could disrupt our business and harm our financial condition
      and operations.***





We
      have
      made strategic acquisitions of businesses, technologies and other assets in
      the
      past. While we have no current agreements or commitments with respect to any
      acquisition, we may in the future acquire businesses, product lines or
      technologies. In the event of any future acquisition, we may not ultimately
      strengthen our competitive position or achieve our goals, or they may be viewed
      negatively by customers, financial markets or investors and we
      could:





·
            Issue
                stock that would dilute our current stockholders' percentage
                ownership;





·
            Incur
                debt and assume other liabilities;
                and





·
            Incur
                amortization expenses related to goodwill and other intangible assets
                and/or incur large and immediate
                write-offs.





Acquisitions
      also involve numerous risks, including:





•
            Problems
                integrating the acquired operations, technologies or products with
                our
                own;





•
            Diversion
                of management's attention from our core
                business;





•
            Assumption
                of unknown liabilities;





•
            Adverse
                effects on existing business relationships with suppliers and
                customers;





•
            Increased
                accounting and financial reporting compliance
                risk;





•
            Risks
                associated with entering new markets;
                and





•
            Potential
                loss of key employees.





We
      may
      not be able to successfully integrate any businesses, products, technologies
      or
      personnel that we might acquire in the future, which could harm our
      business.





**Item
      2. Unregistered sales of equity securities and use of
      proceeds**




Not
      applicable.




**Item
      3. Defaults upon senior securities**





Not
      applicable.





**Item
      4. Submission of matters to a vote of securities
      holders**





In
      August
      2007, we submitted the following matters to our stockholders for their
      approval:




37
 ***Table
          of Contents***




1.
            The
                amendment and restatement of our certificate of incorporation effective
                upon the closing of our initial public
                offering;




2.
            The
                amendment and restatement of our bylaws effective upon the closing
                of our
                initial public offering;




3.
            The
                adoption of our 2007 Equity Incentive Plan effective upon the execution
                of
                the underwriting agreement for our initial public offering;
                and




4.
            The
                form of indemnity agreement entered into by us with each of our directors
                and executive officers.




As
      of August 27, 2007, our stockholders
      had acted as follows with respect to each of the proposals. We did not receive
      a
      written consent from each stockholder. As of the record date for taking such
      actions, we had 354,977,443 shares of common stock outstanding (on an
      as-if-converted basis). The results of the voting from stockholders that
      returned written consents to us are as follows:





Proposal
      1 –The amendment and restatement of our certificate of incorporation effective
      upon the closing of our initial public offering was not approved as we did
      not
      receive the requisite votes needed.




Votes
                in Favor
            312,548,995Votes
                Against
            0




Proposal
      2 –The amendment and restatement of our bylaws effective upon the closing of our
      initial public offering was not approved as we did not receive the requisite
      votes needed.




Votes
                in Favor
            312,548,995Votes
                Against
            0




Proposal
      3 – The adoption of our 2007 Equity Incentive Plan effective upon the execution
      of the underwriting agreement for our initial public offering was
      approved.




Votes
                in Favor
            312,548,995Votes
                Against
            0




Proposal
      4 – The form of indemnity agreement entered into by us with each of our
      directors and executive officers was approved.




Votes
                in Favor
            312,548,995Votes
                Against
            0





Proposals
      1 and 2 required the
      affirmative vote of the holders of a majority of the outstanding shares of
      common stock and preferred stock, voting separately.





Proposals
      3 and 4 required the
      affirmative vote of the holders of a majority of the outstanding shares of
      common stock and preferred stock, voting together.





**Item
      5. Other information**





Not
      applicable.




38
 ***Table
          of Contents***




**Item
      6.  Exhibits**





**Exhibit
                No.**
            
            **Description
                of Exhibits**10.19(1)
            
            Letter
                Agreement between ViewSonic Europe Limited and Burdale Financial
                Limited,
                dated August 23, 2007.10.23(2)
            
            Long
                Term Incentive Program Summary of Terms, as amended.10.32(3)
            
            Amendment
                to Separation Agreement by and between ViewSonic Corporation and
                James A.
                Morlan, dated July 24, 2007.31.1
            
            Certification
                of Chief Executive Officer as required by Rule 13a-14(a) of the Securities
                Exchange Act of 1934, as amended.31.2
            
            Certification
                of Chief Financial Officer as required by Rule 13a-14(a) of the Securities
                Exchange Act of 1934, as amended.32.1*
            
            Certification
                of Chief Executive Officer and Chief Financial Officer as required
                by Rule
                13a-14(b) of the Securities Exchange Act of 1934, as
                amended.




___________





(1)
            Incorporated
                by reference to Exhibit 10.19 to ViewSonic Corporation's Current
                Report on
                Form 8-K, (File No. 000-50730), filed with the Securities and Exchange
                Commission on June 28, 2007.





(2)
            Incorporated
                by reference to
                Exhibit10.23to ViewSonic Corporation's
                Current Report on Form 8-K,(File No.
                000-50730),filed
                with the Securities and Exchange Commission on July 24,
                2007.





(3)
            Incorporated
                by reference to
                Exhibit10.32to ViewSonic Corporation's
                Current Report on Form 8-K,(File No.
                000-50730),filed with
                the Securities and
                Exchange Commission on July 25,
                2007.





*
            The
                certification attached as
                Exhibit 32.1 accompanies this Quarterly Report on Form 10-Q, is not
                deemed
                filed with the Securities and Exchange Commission and is not to be
                incorporated by reference into any filing of ViewSonic Corporation
                under
                the Securities Act of 1933, as amended, or the Securities Exchange
                Act of
                1934, as amended, whether made before or after the date of this Form
                10-Q,
                irrespective of any general incorporation language contained in such
                filing.





39
 ***Table
            of Contents***





**Signatures**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized, on November 14, 2007.




**ViewSonic
                Corporation**By:
            /s/
                Theodore R. SandersTheodore
                R. SandersChief
                Financial Officer(*Principal
                Financial and Accounting
                Officer*)




40
 ***Table
            of Contents***





**Exhibit
      index**




**Exhibit
                No.**
            
            **Description
                of Exhibits**10.19(1)
            
            Letter
                Agreement between ViewSonic Europe Limited and Burdale Financial
                Limited,
                dated August 23, 2007.10.23(2)
            
            Long
                Term Incentive Program Summary of Terms, as amended.10.32(3)
            
            Amendment
                to Separation Agreement by and between ViewSonic Corporation and
                James A.
                Morlan, dated July 24, 2007.31.1
            
            Certification
                of Chief Executive Officer as required by Rule 13a-14(a) of the Securities
                Exchange Act of 1934, as amended.31.2
            
            Certification
                of Chief Financial Officer as required by Rule 13a-14(a) of the Securities
                Exchange Act of 1934, as amended.32.1*
            
            Certification
                of Chief Executive Officer and Chief Financial Officer as required
                by Rule
                13a-14(b) of the Securities Exchange Act of 1934, as
                amended.




___________





(1)
            Incorporated
                by reference to Exhibit 10.19 to ViewSonic Corporation's Current
                Report on
                Form 8-K, (File No. 000-50730), filed with the Securities and Exchange
                Commission on June 28, 2007.





(2)
            Incorporated
                by reference to
                Exhibit10.23to ViewSonic Corporation's
                Current Report on Form 8-K,(File No.
                000-50730),filed with
                the
                Securities and Exchange Commission on July 24,
                2007.





(3)
            Incorporated
                by reference to
                Exhibit10.32to ViewSonic Corporation's
                Current Report on Form 8-K,(File No.
                000-50730),filed with
                the
                Securities and Exchange Commission on July 25,
                2007.




*
            The
                certification attached as
                Exhibit 32.1 accompanies this Quarterly Report on Form 10-Q, is not
                deemed
                filed with the Securities and Exchange Commission and is not to be
                incorporated by reference into any filing of ViewSonic Corporation
                under
                the Securities Act of 1933, as amended, or the Securities Exchange
                Act of
                1934, as amended, whether made before or after the date of this Form
                10-Q,
                irrespective of any general incorporation language contained in such
                filing.






41