**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 June 30, 2007**
 
 **OR**
 
 o
              **TRANSI****TION
                  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
        Chart**er***)**
  **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 o No x
 
 The
        number of shares of the registrant's common stock outstanding was 351,677,443
        shares and the number of shares of Series C preferred stock outstanding was
        3,300,000 shares, each as of July 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 June 30, 2007 and
                      December 31, 2006
                3Condensed
                      consolidated statements of operations for the three
                      and six months ended June 30, 2007 and 2006
                4Condensed
                      consolidated statements of cash flows for the six
                      months ended June 30, 2007 and 2006
                5Notes
                      to condensed consolidated financial
                      statements
                6Item
                      2.
                
                Management’s
                      discussion and analysis of financial condition and
                      results of operations
                13Item
                      3.
                
                Quantitative
                      and qualitative disclosure about market
                      risk
                20Item
                      4.
                
                Controls
                      and procedures
                20**Part
                      II: other information**Item
                      1.
                
                Legal
                      proceedings
                20Item
                      1A.
                
                Risk
                      factors
                21Item
                      2.
                
                Unregistered
                      sales of equity securities and use of
                      proceeds
                27Item
                      3.
                
                Defaults
                      upon senior securities
                27Item
                      4.
                
                Submission
                      of matters to a vote of securities
                      holders
                28Item
                      5.
                
                Other
                      information
                28Item
                      6.
                
                Exhibits
                28Signatures
                29
 2
 *Table
              of Contents*
  **Part
        I**
 
 **ViewSonic
        Corporation and Subsidiaries**
 
 **Condensed
        consolidated balance sheets**
 
 **June
        30, 2007 and December 31, 2006**
 *(in
                  thousands, except share data and par value)*
              
              **June
                    30,**
              ****
              
              **December
                    31,****2007**
              
              
              **2006****(unaudited)****Assets**Current
                  assets:Cash
                  and cash equivalents
              
              $
              72,964
              
              
              $
              69,079Trade
                  receivables, net
              
              
              296,537
              
              
              
              277,162Other
                  receivables
              
              
              18,158
              
              
              
              7,213Inventories
              
              
              191,640
              
              
              
              194,049Deferred
                  income taxes
              
              
              6,099
              
              
              
              7,734Prepaids
                  and other current assets
              
              
              6,727
              
              
              
              3,670Income
                  taxes receivable
              
              
              79
              
              
              
              152Total
                  current assets
              
              
              592,204
              
              
              
              559,059Property,
                  plant and equipment, net
              
              
              21,314
              
              
              
              14,445Long-term
                  investments
              
              
              118
              
              
              
              237Goodwill
              
              
              1,347
              
              
              
              1,347Other
                  assets, net
              
              
              5,134
              
              
              
              3,549Total
                  assets
              
              $
              620,117
              
              
              $
              578,637**Liabilites
                  and stockholders' equity**Current
                  liabilities:Bank
                  borrowings
              
              $
              19,012
              
              
              $
              307Current
                  portion of notes payable - related party
              
              
              43,000
              
              
              
              -Accounts
                  payable
              
              
              408,352
              
              
              
              388,554Accrued
                  promotional expenses
              
              
              22,892
              
              
              
              25,852Accrued
                  warranty expense
              
              
              22,189
              
              
              
              24,455Other
                  accrued expenses
              
              
              27,874
              
              
              
              32,446Total
                  current liabilities
              
              
              543,319
              
              
              
              471,614Subordinated
                  notes payable - related party
              
              
              -
              
              
              
              43,000Deferred
                  income taxes
              
              
              4,307
              
              
              
              -Stockholders'
                  equity:Common
                  stock, $.01 par value 600,000,000 shares authorized; 351,619,666
                  and
                  354,594,666 shares issued as of June 30, 2007 and December 31,
                  2006,
                  respectively
              
              
              3,516
              
              
              
              3,546Preferred
                  stock, $.001 par value 22,800,000 shares authorized; 3,300,000
                  shares
                  issued as of June 30, 2007 and December 31, 2006
              
              
              3
              
              
              
              3Additional
                  paid-in capital
              
              
              92,645
              
              
              
              94,181Accumulated
                  deficit
              
              
              (21,964
              )
              
              
              (31,468
              )Accumulated
                  other comprehensive loss
              
              
              (1,709
              )
              
              
              (2,239
              )Total
                  stockholders' equity
              
              
              72,491
              
              
              
              64,023Total
                  liabilities and stockholders' equity
              
              $
              620,117
              
              
              $
              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 Six Months****Ended
                  June 30,**
              
              
              **Ended
                  June 30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Net
                  sales
              
              $
              423,867
              
              
              $
              379,268
              
              
              $
              833,705
              
              
              $
              706,062Cost
                  of sales
              
              
              388,510
              
              
              
              349,070
              
              
              
              765,000
              
              
              
              645,648Gross
                  profit
              
              
              35,357
              
              
              
              30,198
              
              
              
              68,705
              
              
              
              60,414Selling,
                  general and administrative expenses
              
              
              29,418
              
              
              
              30,017
              
              
              
              58,462
              
              
              
              56,924Income
                  from operations
              
              
              5,939
              
              
              
              181
              
              
              
              10,243
              
              
              
              3,490Other
                  income (expense):Interest
                  (expense) income, net
              
              
              (735
              )
              
              
              156
              
              
              
              (899
              )
              
              
              313Other
                  income, net
              
              
              1,532
              
              
              
              285
              
              
              
              1,706
              
              
              
              1,621Total
                  other income, net
              
              
              797
              
              
              
              441
              
              
              
              807
              
              
              
              1,934Income
                  before income taxes
              
              
              6,736
              
              
              
              622
              
              
              
              11,050
              
              
              
              5,424Provision
                  for income taxes
              
              
              792
              
              
              
              97
              
              
              
              1,136
              
              
              
              1,323Net
                  income
              
              
              5,944
              
              
              
              525
              
              
              
              9,914
              
              
              
              4,101Preferred
                  stock accretion
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (48
              )Net
                  income available to common shareholders
              
              $
              5,944
              
              
              $
              525
              
              
              $
              9,914
              
              
              $
              4,053Earnings
                  per common share:Basic
              
              $
              0.02
              
              
              $
              -
              
              
              $
              0.03
              
              
              $
              0.01Diluted
              
              $
              0.02
              
              
              $
              -
              
              
              $
              0.03
              
              
              $
              0.01Weighted
                  averages shares used in per share calculations:Basic
              
              
              352,277
              
              
              
              354,131
              
              
              
              353,429
              
              
              
              354,095Diluted
              
              
              359,439
              
              
              
              360,749
              
              
              
              360,209
              
              
              
              360,757
  
 *The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.*
  4
 *Table
            of Contents*
  **ViewSonicCorporation
        and Subsidiaries**
 
 **Condensed
        consolidated statements of cash flows**
 
 **Six
                  months ended***(in
                  thousands)*
              
              **June
                  30,****2007**
              
              
              **2006****Cash
                  flows from operating activities**Net
                  income
              
              $
              9,914
              
              
              $
              4,101Adjustments
                  to reconcile net income to net cash used in operating
                  activities:Noncash
                  gain from litigation settlement
              
              
              (2,710
              )
              
              
              -Depreciation
                  and amortization
              
              
              898
              
              
              
              1,418(Gain)
                  loss on disposal of property, plant and equipment
              
              
              (5
              )
              
              
              9Provision
                  for doubtful accounts
              
              
              233
              
              
              
              376Net
                  loss on sale and impairment of long-term investments
              
              
              135
              
              
              
              1,320Deferred
                  income taxes
              
              
              2,631
              
              
              
              (21
              )Stock-based
                  compensation expense
              
              
              134
              
              
              
              111Changes
                  in operating assets and liabilities:Trade
                  receivables
              
              
              (18,923
              )
              
              
              (19,764
              )Other
                  receivables
              
              
              (9,830
              )
              
              
              (808
              )Inventories
              
              
              3,107
              
              
              
              (15,933
              )Prepaids
                  and other current assets
              
              
              (3,000
              )
              
              
              (1,460
              )Accounts
                  payable
              
              
              18,352
              
              
              
              9,310Accrued
                  promotional and other expenses
              
              
              (5,725
              )
              
              
              9,268Accrued
                  warranty expense
              
              
              (2,288
              )
              
              
              2,716Income
                  taxes payable/receivable
              
              
              (1,893
              )
              
              
              280Net
                  cash used in operating activities
              
              
              (8,970
              )
              
              
              (9,077
              )**Cash
                  flows from investing activities**Proceeds
                  from sale of property, plant and equipment
              
              
              9
              
              
              
              14Purchase
                  of property, plant and equipment
              
              
              (5,418
              )
              
              
              (669
              )Proceeds
                  on sale of long-term investments
              
              
              -
              
              
              
              954Proceeds
                  on sale of short-term investments
              
              
              -
              
              
              
              7,544Purchase
                  of short-term investments
              
              
              -
              
              
              
              (15,213
              )Change
                  in other assets
              
              
              (963
              )
              
              
              -Net
                  cash used in investing activities
              
              
              (6,372
              )
              
              
              (7,370
              )**Cash
                  flows from financing activities**Net
                  proceeds from bank borrowings
              
              
              18,645
              
              
              
              4,213Proceeds
                  from issuance of common stock
              
              
              9
              
              
              
              61Redemption
                  of preferred stock
              
              
              -
              
              
              
              (15,000
              )Net
                  cash provided by (used in) financing activities
              
              
              18,654
              
              
              
              (10,726
              )Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              573
              
              
              
              108Net
                  increase (decrease) in cash and cash equivalents
              
              
              3,885
              
              
              
              (27,065
              )Cash
                  and cash equivalents at beginning of period
              
              
              69,079
              
              
              
              93,998Cash
                  and cash equivalents at end of period
              
              $
              72,964
              
              
              $
              66,933**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 June 30, 2007 and the Company’s results of
        operations and cash flows for the three and six months ended June 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 six months ended June 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.
 
 ***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.
 
 ***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 Amendme**nt 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 interpret**ation 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.
  6
 *Table
            of Contents*
  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 June 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
              
              2002
                  and priorUnited
                  Kingdom
              
              2004
                  and priorCanada
              
              2000
                  and priorGermany
              
              2000
                  and priorFrance
              
              2003
                  and priorTaiwan
              
              2002
                  and priorChina
              
              2001
                  and prior
 
 The
        Company's federal and certain 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. It is possible
        that
        approximately $1.1 million of income tax liabilities related to uncertain
        intercompany transfer pricing items will be recognized as an income tax
        benefit in the next twelve months due to the closing of open tax
        years.
 
 In
        May
        2007, the Financial Accounting Standards Board, or FASB, issued FASB Staff
        Position No. FASB Interpretation No. 48, *Definition of Settlement in
        F**ASB 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. The adoption did not have
        a
        material impact on the Company’s financial statements.
 
 **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 such 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 June 30, 2007, there were
        11.1 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 our 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 though 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 we refer 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.
  7
 *Table
            of Contents*
  On
        July
        18, 2007, the Compensation Committee of the Board of Directors determined
        to
        modify 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  33 1/3% on the February 2, 2008, 33
        1/3% on February 2, 2009 and 33 1/3% 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 is not expected to have a material impact on the Company’s
        financial statements.
 
 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
              
              
              7,260
              
              
              
              0.55Exercised
              
              
              (25
              )
              
              
              0.38Cancelled
              
              
              (1,283
              )
              
              
              0.39Outstanding
                  at June 30, 2007
              
              
              31,293
              
              
              $
              0.43
              
              
              
              6.37Exercisable
                  at June 30, 2007
              
              
              20,272
              
              
              
              0.38
              
              
              
              4.74
  The
        total
        intrinsic value of options outstanding as of June 30, 2007 was
        $5.6 million. Total cash received from the exercise of employee stock
        options was $9,500 for the six months ended June 30, 2007.
 
 The
        following table summarizes information for options outstanding as of June
        30,
        2007:
  **Weighted****average****Number
                  of**
              
              
              **remaining**
              
              
              **Weighted**
              
              
              **Number
                  of****options**
              
              
              **contractual**
              
              
              **average**
              
              
              **options****outstanding**
              
              
              **term**
              
              
              **exercise**
              
              
              **exercisable****Range
                  of exercise prices**
              
              
              **(in
                  000s)**
              
              
              **(in
                  years)**
              
              
              **per
                  share**
              
              
              **(in
                  000's)**$0.38
              
              
              
              21,297
              
              
              
              4.88
              
              
              $
              0.38
              
              
              
              19,966$0.45
              
              
              
              667
              
              
              
              8.47
              
              
              $
              0.45
              
              
              
              252$0.54
              
              
              
              7,444
              
              
              
              9.57
              
              
              $
              0.54
              
              
              
              54$0.57
              
              
              
              1,885
              
              
              
              9.87
              
              
              $
              0.57
              
              
              
              -
  ***Valuation
        and expense recognition of stock-based awards under
        SFAS 123R***
 
 For
        the
        three and six months ended June 30, 2007, stock-based compensation expense
        for
        employee stock options recognized was $74,000 and $134,000, respectively.
        No
        income tax benefit related to stock-based compensation expense was recognized
        for the three and six months ended June 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:
 
 **Six
                  months ended June 30,****2007**
              
              
              **2006**Expected
                  volatility
              
              
              46.1
              %
              
              
              52.0
              %Risk-free
                  interest rate
              
              
              4.7
              %
              
              
              5.0
              %Expected
                  dividend yield
              
              
              0
              %
              
              
              0.0
              %Expected
                  option life (in years)
              
              
              6.07
              
              
              
              6.25Weighted
                  average fair value of stock options granted per share
              
              $
              0.28
              
              
              $
              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 4.4% for the six months ended June 30,
        2007.
  8
 *Table
            of Contents*
  As
        of
        June 30, 2007, the remaining amount of unrecognized compensation cost related
        to
        employee stock options was $2.3 million, which is expected to be recognized
        over a weighted average period of 2.9 years.
 
 **Note 3—Comprehensive
        income**
 
 Comprehensive
        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 income for the
        periods indicated (in thousands):
 
 **Three
                  Months Ended**
                **June
                  30,**
              
              
              **Six
                  Months Ended**
                **June
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Net
                    income
              
              $
              5,944
              
              
              $
              525
              
              
              $
              9,914
              
              
              $
              4,101Foreign
                    currency translation
              
              
              430
              
              
              
              111
              
              
              
              530
              
              
              
              201Unrealized
                    holding (losses) gains on marketable securities, less realized
                    gains
              
              
              -
              
              
              
              (163
              )
              
              
              -
              
              
              
              428Total
                    comprehensive income
              
              $
              6,374
              
              
              $
              473
              
              
              $
              10,444
              
              
              $
              4,730
 
 **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.
 
 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 $38 million as of June 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 in 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.
 
 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 six
        months ended June 30, 2007 was $0.1 million and $0.3 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.
        Trial will not be held before March 8, 2008. 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 these post-trial
        proceedings 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.
  9
 *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. ViewSoni**c 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 the post-trial proceedings in Case No.
        CV-02-6775 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
        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 in the U.S. District
        Court, District of Delaware, 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.  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. 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.
 
 **Note 6—Business
        segments**
 
 During
        the fourth quarter of 2006, 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. 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, EMEA (Europe, Middle-East and Africa) and Asia-Pacific. 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 financial information is for the periods indicated. The
        following segment information for the three and six months ended June 30,
        2006 has been recast to conform to the current year presentation (in
        thousands):
  10
 *Table
            of Contents*
  **Three
                  months ended June 30,**
              
              
              **Six
                  months ended June 30,****($
                  in thousands)**
              
              **2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Net
                  sales:Americas
              
              $
              186,027
              
              
              $
              187,445
              
              
              $
              378,727
              
              
              $
              340,385EMEA
              
              
              70,527
              
              
              
              70,414
              
              
              
              157,494
              
              
              
              143,679Asia-Pacific
              
              
              167,313
              
              
              
              121,409
              
              
              
              297,484
              
              
              
              221,998$
              423,867
              
              
              $
              379,268
              
              
              $
              833,705
              
              
              $
              706,062Income
                  (loss) from operations(1):Americas
              
              $
              1,632
              
              
              $
              3,364
              
              
              $
              1,642
              
              
              $
              7,131EMEA
              
              
              (1,022
              )
              
              
              (3,740
              )
              
              
              49
              
              
              
              (7,653
              )Asia-Pacific
              
              
              5,608
              
              
              
              2,660
              
              
              
              8,965
              
              
              
              6,136Other
                  (2)
              
              
              (279
              )
              
              
              (2,103
              )
              
              
              (413
              )
              
              
              (2,124
              )$
              5,939
              
              
              $
              181
              
              
              $
              10,243
              
              
              $
              3,490
 (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, EMEA
                    and
                    Asia-Pacific region, respectively.
 (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.
 
 The
        following table summarizes activity in the Company's warranty liability for
        the
        six months ended June 30, 2007 and 2006 (in thousands):
 
 
 **Beginning**
              
              
              
              
              
              
              
              
              
              
              
              **Ending****accrued**
              
              
              **Additions**
              
              
              **Payments**
              
              
              
              
              
              **accrued****warranty**
              
              
              **charged
                  to**
              
              
              **for
                  units**
              
              
              
              
              
              **warranty****Six
                  months ended June 30,**
              
              **liability**
              
              
              **expense**
              
              
              **returned**
              
              
              **Adjustments(1)**
              
              
              **liability****2007**
              
              $
              24,455
              
              
              $
              10,057
              
              
              $
              (8,475
              )
              
              $
              (3,848
              )
              
              $
              22,189**2006**
              
              $
              21,350
              
              
              $
              10,520
              
              
              $
              (7,304
              )
              
              $
              (486
              )
              
              $
              24,080
 (1)
              The
                  2007 adjustment was primarily 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—Earnings
        per share**
 
 The
        Company presents both basic and diluted 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 income per common share computations
        (in thousands, except per share data):
 
 **Three
                  months ended June 30,**
              
              
              **Six
                  months ended June 30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Net
                  income (1)
              
              $
              5,889
              
              
              $
              525
              
              
              $
              9,822
              
              
              $
              4,053Weighted
                  average number of shares issued
              
              
              352,277
              
              
              
              354,131
              
              
              
              353,429
              
              
              
              354,095Stock
                  options (2)
              
              
              7,162
              
              
              
              3,391
              
              
              
              6,780
              
              
              
              3,435Interest
                  warrants (3)
              
              
              -
              
              
              
              3,227
              
              
              
              -
              
              
              
              3,227Diluted
                  shares
              
              
              359,439
              
              
              
              360,749
              
              
              
              360,209
              
              
              
              360,757Earnings
                  per common share:Basic
              
              $
              0.02
              
              
              $
              -
              
              
              $
              0.03
              
              
              $
              0.01Diluted
              
              $
              0.02
              
              
              $
              -
              
              
              $
              0.03
              
              
              $
              0.01
 
 ______________________________________
  (1)
              In
                  accordance with EITF 03-06, net 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 income of $55,000 and $92,000 were allocated to preferred
                  stock for the three and six months ended June 30, 2007, respectively,
                  and have been excluded from the computation
                  above.
  11
 *Table
            of Contents*
  (2) For
        the three and six months ended June 30, 2007, 8.5 million shares and
        7.0 million shares, respectively, were excluded from the diluted earnings
        per
        common share calculation because they were anti-dilutive. For the three and
        six months ended June 30, 2006, 0 shares were excluded from the diluted
        earnings per common share calculation because they were
        anti-dilutive.
 
 (3) For
        the three and six months ended June 30, 2007, there were no warrants
        outstanding. For the three and six months ended June 30, 2006,
        7.5 million shares of common stock issuable upon the exercise of
        outstanding warrants were excluded from the diluted earnings per share
        calculation because they were anti-dilutive.
 
 **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 $6.4 million and $13.0 million for the
        three
        and six months ended June 30, 2007, respectively. The Company had receivables
        of
        approximately $2.8 million and $0.4 million from these related parties at
        June
        30, 2007 and December 31, 2006, respectively, which are included in other
        receivables.
 
 As
        of
        June 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 June 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 six months ended June 30, 2007. Interest
        expense related to this amount totaled $0.4 million and $0.9 million for
        the
        three and six months ended June 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.  During the three months ended June 30, 2007  the
        Company received the 3,000,000 shares of common stock, which were returned
        to
        authorized but unissued status, and $1.0 million in cash and as of June 30,
        2007
        has recorded $1.0 million in other receivables on the Company’s condensed
        consolidated balance sheet.
  12
 *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
        second quarter of 2007, the display industry began to experience shortages
        in
        certain LCD panel sizes resulting in an increase in panel prices. These
        shortages occurred despite slower than expected end user demand for LCD
        monitors. This resulted in higher product costs and reduced margins compared
        to
        the first quarter of 2007. Despite these challenges, our operating profits
        increased $5.8 million over the prior year as a result of sales growth,
        increased leverage in our selling, general and administrative expenses, and
        our
        initiative to source LCD panels directly from manufacturers. We were able
        to
        grow sales in regional markets by enhancing our core product offerings across
        our display portfolios and implementing strategic pricing
        strategies. We continue to look for opportunities to optimize our business
        processes in order to maximize operating efficiencies. We believe our initiative
        to source LCD panels directly from manufacturers 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. For
        example, in periods of oversupply, the benefits of LCD panel purchases
        are greater while our ASPs generally decrease.  In periods of short
        supply those benefits decline, but the ASPs generally increase. We believe
        this sourcing initiative will 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 22.9% in the second quarter of 2007 compared to
        the
        second quarter of 2006. The display industry continues to experience a shift
        from older technologies, such as cathode ray tube, or CRT, to newer
        technologies, such as LCD, as well as a broadening of applications from PC
        monitors to TVs and other digital media products. Unit shipments of our LCD
        monitors, LCD TVs, and projectors grew 35.4%, 34.1%, and 64.7%, respectively,
        in
        the second quarter of 2007 compared to the second quarter of 2006, while
        shipments of our CRT monitors declined 47.5% in the second quarter of 2007
        compared to the second quarter of 2006. The ASPs of our LCD monitors declined
        11.2% in the second quarter of 2007 compared to the second quarter of
        2006.
 
 Net
        sales
        increased $44.6 million, or 11.8%, to $423.9 million in the second quarter
        of
        2007 from $379.3 million in the second quarter of 2006. The increase was
        primarily due to an increase in sales in Asia and Latin America and expansion
        of
        core product offerings across our LCD monitor and projector product lines.
        Income from operations increased $5.8 million to $5.9 million in the second
        quarter of 2007 from $0.2 million in the second quarter of 2006. This increase
        was due to an increase in net sales, higher gross margins of 8.3% in the
        second
        quarter of 2007 compared to 8.0% in the second quarter of 2006 and increased
        leverage in our selling, general and administrative expenses as a percentage
        of
        net sales, which decreased to 6.9% in the second quarter of 2007 compared
        to
        7.9% in the second quarter of 2006.
 
 In
        April
        2007, we entered into a settlement agreement with a former vendor related
        to
        commercial litigation. The former vendor agreed to pay us $2.0 million and
        return 3,000,000 shares of our common stock with a fair value of $1.7 million
        in
        connection with the settlement.  During the second quarter of 2007, we
        recognized a $3.7 million gain of which $3.0 million was recorded in cost
        of
        sales and $0.7 million was recorded in selling, general and administrative
        expenses. During the second quarter of 2007, we received the 3,000,000
        shares of common stock and $1.0 million in cash and as of June 30, 2007 had
        recorded $1.0 million in other receivables on our condensed consolidated
        balance
        sheet.
 
 
 **Results
        of operations**
 
 **Comparison
        of the three months ended June 30, 2007 and 2006**
 
 The
        following table sets forth our condensed consolidated statements of operations
        for the periods indicated ($ in thousands):
  13
 *Table
            of Contents*
  **Three
                  months ended June 30,****Increase
                  (decrease)****2007**
              
              
              **2006**
              
              
              
              **$**
              
              
              ****
              **%**Net
                  sales
              
              $
              423,867
              
              
              $
              379,268
              
              
              $
              44,599
              
              
              
              11.8
              %Cost
                  of sales(1)
              
              
              388,510
              
              
              
              349,070
              
              
              
              39,440
              
              
              
              11.3Gross
                  profit
              
              
              35,357
              
              
              
              30,198
              
              
              
              5,159
              
              
              
              17.1Selling,
                  general and administrative expenses(1)
              
              
              29,418
              
              
              
              30,017
              
              
              
              (599
              )
              
              
              (2.0
              )Income
                  from operations
              
              
              5,939
              
              
              
              181
              
              
              
              5,758
              
              
              
              3181.2Other
                  income (expense):Interest
                  (expense) income, net
              
              
              (735
              )
              
              
              156
              
              
              
              (891
              )
              
              
              *Other
                  income (expense), net
              
              
              1,532
              
              
              
              285
              
              
              
              1,247
              
              
              
              437.5Total
                  other income (expense), net
              
              
              797
              
              
              
              441
              
              
              
              356
              
              
              
              80.7Income
                  from continuing operations before income taxes
              
              
              6,736
              
              
              
              622
              
              
              
              6,114
              
              
              
              983.0Provision
                  for income taxes
              
              
              792
              
              
              
              97
              
              
              
              695
              
              
              
              716.5Net
                  income
              
              
              5,944
              
              
              
              525
              
              
              
              5,419
              
              
              
              1032.2Preferred
                  stock accretion
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              *Net
                  income available to common stockholders
              
              $
              5,944
              
              
              $
              525
              
              
              $
              5,419
              
              
              
              1032.2
              %*
                  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
                    litigaton.
  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 June 30,**(1)**2007**
              
              
              **2006**Net
                  sales
              
              
              100.0
              %
              
              
              100.0
              %Cost
                  of sales
              
              
              91.7
              
              
              
              92.0Gross
                  profit
              
              
              8.3
              
              
              
              8.0Selling,
                  general and administrative expenses
              
              
              6.9
              
              
              
              7.9Income
                  from operations
              
              
              1.4
              
              
              
              -Other
                  income (expense):Interest
                  (expense) income, net
              
              
              (0.2
              )
              
              
              -Other
                  income (expense), net
              
              
              0.4
              
              
              
              0.1Total
                  other income (expense), net
              
              
              0.2
              
              
              
              0.1Income
                  from continuing operations before income taxes
              
              
              1.6
              
              
              
              0.2Provision
                  for income taxes
              
              
              0.2
              
              
              
              -Net
                  income
              
              
              1.4
              
              
              
              0.1Preferred
                  stock accretion
              
              
              -
              
              
              
              -Net
                  income available to common stockholders
              
              
              1.4
              %
              
              
              0.1
              %(1)
                  May not total due to rounding differences.
 
 ***Net
        sales***
 
 Net
        sales
        increased $44.6 million, or 11.8%, to $423.9 million in the second quarter
        of
        2007 from $379.3 million in the second quarter of 2006. The increase was
        primarily due to increases in LCD, LCD TV and projector unit shipments
        partially offset by lower CRT unit shipments and declines in our ASPs of
        9.1%
        across all product categories in the second quarter of 2007 compared to the
        second quarter of 2006. The ASPs of our LCD monitors declined 11.2% in the
        second quarter of 2007 compared to the second quarter of 2006. The decline
        in
        ASPs reflects the effects of competition, slow end user demand, and regional
        and
        product mix.
 
 Total
        unit shipments increased 22.9% in the second quarter of 2007 compared to
        the
        second quarter of 2006. The increase was primarily due to strong unit shipments
        in our Asia-Pacific segment and continued expansion in Latin America,
        Russia, China and other Asian markets driven by strategic marketing efforts.
        Unit shipments of our LCD monitors, LCD TVs, and projectors grew 35.4%, 34.1%,
        and 64.7%, respectively, in the second quarter of 2007 compared to the second
        quarter of 2006, while shipments of our CRT monitors declined 47.5% in the
        second quarter of 2007 compared to the second quarter of 2006. Of the display
        products shipped in the second quarter of 2007, LCD monitors accounted for
        82.5%
        and all other products accounted for 17.5% of units shipped as compared to
        74.9%
        and 25.1%, respectively, in the second quarter of 2006.
 
 ***Cost
        of sales***
 
 Cost
        of
        sales increased $39.4 million, or 11.3%, to $388.5 million in the second
        quarter
        of 2007 from $349.1 million in the second quarter of 2006. As a percentage
        of
        net sales, cost of sales decreased to 91.7% in the second quarter of 2007
        from
        92.0% in the second quarter of 2006. The decrease in cost of sales as a
        percentage of net sales was primarily due to a $3.0 million gain related
        to the
        settlement of commercial litigation, and lower freight and warranty
        expenses. Product costs as a percentage of net sales were 88.3% in the
        second quarter of 2007 compared to 88.2% in the second quarter of 2006. Gross
        margin increased to 8.3% in the second quarter of 2007 from 8.0% in the second
        quarter of 2006.
 
 ***Selling,
        general, and administrative expenses***
 
 Selling,
        general and administrative expenses decreased $0.6 million, or 2.0%, to
        $29.4 million in the second quarter of 2007 from $30.0 million in the
        second quarter of 2006. The decrease was primarily due to lower selling and
        marketing expenses of $1.3 million, lower incentive compensation of $1.3
        million, and a $0.7 million gain related to the settlement of commercial
        litigation, partially offset by an increases in personnel-related costs of
        $2.1
        million due to higher headcount, an increase in account development fund
        expenses of $0.5 million and an increase in other costs of $0.1 million.
        As a
        percentage of net sales, selling, general and administrative expenses decreased
        to 6.9% in the second quarter of 2007 from 7.9% in the second quarter of
        2006 as
        a result of our continued focus on streamlining our business processes to
        maximize operating efficiencies.
  14
 *Table
            of Contents*
  ***Total
        other income (expense), net***
 
 Total
        other income (expense), net, increased $0.4 million to $0.8 million in the
        second quarter of 2007 from $0.4 million in the second quarter of 2006. The
        increase was primarily due to higher foreign currency translation gains of
        $0.5
        million and lower impairment charges on long-term investments of $0.9 million,
        partially offset by lower interest income of $0.7 million due to lower average
        cash balances held during the second quarter of 2007 compared to 2006, higher
        interest expense of $0.2 million as a result of higher average loan balances
        outstanding during the second quarter of 2007 compared to the 2006, and other
        net expenses of $0.1 million.
 
 ***Provision
        for income taxes***
 
 Our
        provision for income taxes increased $0.7 million to $0.8 million in the
        second
        quarter of 2007 from $0.1 million in the second quarter of 2006. The estimated
        effective tax rate as a percentage of pre-tax income decreased to 11.8% in
        the second quarter of 2007 compared to 15.6% in the second quarter of
        2006 primarily due to an increase in the proportion of income earned in
        jurisdictions having lower effective tax rates, particularly in
        Asia.
 
 
 **Comparison
        of the six months ended June 30, 2007 and 2006**
 
 The
        following table sets forth our condensed consolidated statements of operations
        for the periods indicated ($ in thousands):
 
 **Six
                  months ended June 30,****Increase
                  (decrease)****2007**
              
              
              **2006**
              
              
              
              **$**
              
              
              ****
              **%**Net
                  sales
              
              $
              833,705
              
              
              $
              706,062
              
              
              $
              127,643
              
              
              
              18.1
              %Cost
                  of sales(1)
              
              
              765,000
              
              
              
              645,648
              
              
              
              119,352
              
              
              
              18.5Gross
                  profit
              
              
              68,705
              
              
              
              60,414
              
              
              
              8,291
              
              
              
              13.7Selling,
                  general and administrative expenses(1)
              
              
              58,462
              
              
              
              56,924
              
              
              
              1,538
              
              
              
              2.7Income
                  from operations
              
              
              10,243
              
              
              
              3,490
              
              
              
              6,753
              
              
              
              193.5Other
                  income (expense):Interest
                  (expense) income, net
              
              
              (899
              )
              
              
              313
              
              
              
              (1,212
              )
              
              
              *Other
                  income (expense), net
              
              
              1,706
              
              
              
              1,621
              
              
              
              85
              
              
              
              5.2Total
                  other income (expense), net
              
              
              807
              
              
              
              1,934
              
              
              
              (1,127
              )
              
              
              (58.3
              )Income
                  from continuing operations before income taxes
              
              
              11,050
              
              
              
              5,424
              
              
              
              5,626
              
              
              
              103.7Provision
                  for income taxes
              
              
              1,136
              
              
              
              1,323
              
              
              
              (187
              )
              
              
              (14.1
              )Net
                  income
              
              
              9,914
              
              
              
              4,101
              
              
              
              5,813
              
              
              
              141.7Preferred
                  stock accretion
              
              
              -
              
              
              
              (48
              )
              
              
              48
              
              
              
              *Net
                  income available to common stockholders
              
              $
              9,914
              
              
              $
              4,053
              
              
              $
              5,861
              
              
              
              144.6
              %*
                  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.
 
 The
        following table sets forth our condensed consolidated statements of operations
        expressed as a percentage of net sales for the periods indicated:
 
 **Six
                  months ended June 30,**(1)**2007**
              
              
              **2006**Net
                  sales
              
              
              100.0
              %
              
              
              100.0
              %Cost
                  of sales
              
              
              91.8
              
              
              
              91.4Gross
                  profit
              
              
              8.2
              
              
              
              8.6Selling,
                  general and administrative expenses
              
              
              7.0
              
              
              
              8.1Income
                  from operations
              
              
              1.2
              
              
              
              0.5Other
                  income (expense):Interest
                  (expense) income, net
              
              
              (0.1
              )
              
              
              -Other
                  income (expense), net
              
              
              0.2
              
              
              
              0.2Total
                  other income (expense), net
              
              
              0.1
              
              
              
              0.3Income
                  from continuing operations before income taxes
              
              
              1.3
              
              
              
              0.8Provision
                  for income taxes
              
              
              0.1
              
              
              
              0.2Net
                  income
              
              
              1.2
              
              
              
              0.6Preferred
                  stock accretion
              
              
              -
              
              
              
              -Net
                  income available to common stockholders
              
              
              1.2
              %
              
              
              0.6
              %(1)
                  May not total due to rounding differences.
  ***Net
        sales***
 
 Net
        sales
        increased $127.6 million, or 18.1%, to $833.7 million in the first six
        months of 2007 from $706.1 million in the first six months of 2006. The
        increase was primarily due to increases in LCD, LCD TV and projector unit
        shipments partially offset by lower CRT unit shipments and declines in our
        ASPs
        of 7.4% across all product categories in the first six months of 2007 compared
        to the first six months of 2006. The ASPs of our LCD monitors declined 15.7%
        in
        the first six months of 2007 compared to the first six months of 2006. The
        decline in ASPs reflects the effects of competition, slow end user demand,
        and
        regional and product mix.
 
 Total
        unit shipments increased 27.5% in the first six months of 2007 compared to
        the
        first six months of 2006. The increase was primarily due to strong
        unit shipments in our Asia-Pacific segment and continued expansion in Latin
        America, Russia, China and other Asian markets driven by strategic marketing
        efforts. Unit shipments of our LCD monitors, LCD TVs, and projectors grew
        51.0%,
        48.7%, and 79.8%, respectively, in the first six months of 2007 compared
        to the
        prior year, while shipments of our CRT monitors declined 47.2% in the first
        six
        months of 2007 compared to the first six months of 2006. Of the display products
        shipped in the first six months of 2007, LCDs accounted for 83.0% and all
        other
        products accounted for 17.0% of such units shipped as compared to 72.7% and
        27.3%, respectively, in the first six months of 2006.
  15
 *Table
            of Contents*
  ***Cost
        of sales***
 
 Cost
        of
        sales increased $119.4 million, or 18.5%, to $765.0 million in the first
        six
        months of 2007 from $645.6 million in the first six months of 2006. As a
        percentage of net sales, cost of sales increased to 91.8% in the first six
        months of 2007 from 91.4% in the first six months of 2006. The increase in
        cost
        of sales as a percentage of net sales was primarily due to higher product
        costs
        as a percentage of net sales of 88.4% in the first six months of 2007 compared
        to 87.3% in the prior year, partially offset by lower warranty expenses of
        $3.8
        million due to improvements in our defect rates, lower repair costs and
        favorable changes in repair patterns of which $3.3 million related to prior
        periods, a $3.0 million gain related to the settlement of commercial litigation,
        and lower freight expenses. Gross margin decreased to 8.2% in the first six
        months of 2007 from 8.6% in the first six months of 2006.
 
 ***Selling,
        general, and administrative expenses***
 
 Selling,
        general and administrative expenses increased $1.5 million, or 2.7%, to
        $58.5 million in the first six months of 2007 from $56.9 million in
        the first six months of 2006. The increase was primarily due to an increase
        in
        personnel-related costs of $3.2 million due to higher headcount, an increase
        in
        account development fund expenses of $0.6 million, higher facilities expenses
        of
        $0.4 million and other costs of $0.2 million, partially offset by lower selling
        and marketing expenses of $1.1 million, lower incentive compensation of $1.1
        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 7.0% in the first six months of 2007 from 8.1% in the
        first six months of 2006 as a result of our continued focus on streamlining
        our
        business processes to maximize operating efficiencies.
 
 ***Total
        other income (expense), net***
 
 Total
        other income (expense), net, decreased $1.1 million to $0.8 million in the
        first
        six months of 2007 from $1.9 million in the first six months of 2006. The
        decrease was primarily due to lower foreign currency translation gains of
        $1.1
        million, lower interest income of $0.6 million due to lower average cash
        balances held during the first six months of 2007 compared to 2006 and higher
        interest expense of $0.6 million as a result of higher average loan balances
        outstanding during the first six months of 2007 compared to the first six
        months
        of 2006, partially offset by lower impairment charges on long-term investments
        of $1.2 million.
 
 ***Provision
        for income taxes***
 
 Our
        provision for income taxes decreased $0.2 million to $1.1 million in the
        first
        six months of 2007 from $1.3 million in the first six months of 2006. The
        estimated effective tax rate as a percentage of pre-tax income decreased
        to
        10.3% in the first six months of 2007 compared to 24.4% in the first six
        months
        of 2006 primarily due to 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, EMEA and Asia-Pacific. 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 fourth
        quarter of 2006, management 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. Management believes that this
        segment information provides useful information for analyzing the underlying
        business results. The following segment information for the three and six
        months
        ended June 30, 2006 has been recast to conform to the 2007
        presentation.
 
 **Comparison
        of the three months ended June 30, 2007 and 2006**
 
 
 **Three
                  months ended June 30,**
              
              
              **Increase
                  (decrease)****($
                  in thousands)**
              
              **2007**
              
              
              **2006**
              
              
              **$**
              
              
              
              **%**Net
                  sales:Americas
              
              $
              186,027
              
              
              $
              187,445
              
              
              $
              (1,418
              )
              
              
              (0.8
              )%EMEA
              
              
              70,527
              
              
              
              70,414
              
              
              
              113
              
              
              
              0.2Asia-Pacific
              
              
              167,313
              
              
              
              121,409
              
              
              
              45,904
              
              
              
              37.8$
              423,867
              
              
              $
              379,268
              
              
              $
              44,599
              
              
              
              11.8Income
                  (loss) from operations(1):Americas
              
              $
              1,632
              
              
              $
              3,364
              
              
              $
              (1,732
              )
              
              
              (51.5
              )EMEA
              
              
              (1,022
              )
              
              
              (3,740
              )
              
              
              2,718
              
              
              
              72.7Asia-Pacific
              
              
              5,608
              
              
              
              2,660
              
              
              
              2,948
              
              
              
              110.8Other(2)
              
              
              (279
              )
              
              
              (2,103
              )
              
              
              1,824
              
              
              
              *$
              5,939
              
              
              $
              181
              
              
              $
              5,758
              
              
              
              3181.2
              %(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,
                  EMEA and Asia- Pacific region, respectively.(2)  
                  Includes certain corporate expenses that were not allocated to
                  a specific
                  segment for management reporting purposes.*
                Percentage not meaningful.
 16
 *Table
                  of
                  Contents*
  **Americas**
 
 ***Net
        sales***
  In
        our
        Americas region, net sales decreased $1.4 million, or 0.8%, to $186.0 million
        in
        the second quarter of 2007 from $187.4 million in the second quarter of 2006.
        The decrease was primarily due to lower CRT unit shipments of 53.0% and lower
        ASPs for our LCD, LCD TV, projector and CRT products. This decrease was
        partially offset by increased unit shipments in our LCD TV and projector
        products of 38.1% and 71.6%, respectively.
 
 ***Income
        from operations***
 
 In
        our
        Americas region, income from operations decreased $1.7 million to $1.6 million
        in the second quarter of 2007 from $3.4 million in the second quarter of
        2006
        primarily due to lower gross margins as a result of 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
        gains related to the settlement of commercial litigation, lower warranty
        expenses and lower selling, general and administrative expenses primarily
        due to
        lower advertising expenses, account development fund expenses, and lower
        incentive compensation as a result of lower operating performance.
 
 **EMEA**
 
 ***Net
        sales***
 
 In
        our
        EMEA region, net sales increased $0.1 million, or 0.2%, to $70.5 million
        in the
        second quarter of 2007 from $70.4 million in the second quarter of 2006.
        The
        increase was primarily due to growth in our LCD, LCD TV and projector unit
        shipments of 27.5%, 109.9% and 37.4%, respectively. The increase was partially
        offset by a decrease in CRT unit shipments of 51.4% and lower ASPs in our
        LCD,
        LCD TV, projector and CRT products. Foreign currency translation had a positive
        impact on our net sales in the second quarter of 2007 due to an 8% stronger
        Euro exchange rate against the U.S. dollar based on an average rate in the
        second quarter of 2007 compared to the prior year.
 
 ***Loss from
        operations***
 
 In
        our
        EMEA region, loss from operations decreased $2.7 million to a loss of $1.0
        million in the second quarter of 2007 from a loss of $3.7 million in the
        second
        quarter of 2006. The decrease was primarily due to higher gross
        margins driven by lower product costs as a percentage of net sales, gains
        related to the settlement of commercial litigation, lower warranty costs
        due to
        lower defect rates and improved operating efficiencies and lower incentive
        compensation and advertising expenses. This decrease was partially offset
        by higher selling, general and administrative expenses primarily due to higher
        personnel-related expenses due to an increase in headcount and higher facilities
        expenses.
 
 **Asia-Pacific**
 
 ***Net
        sales***
 
 In
        our
        Asia-Pacific region, net sales increased $45.9 million, or 37.8%, to $167.3
        million in the second quarter of 2007 from $121.4 million in the second quarter
        of 2006. The increase was primarily due to an increase in unit shipments
        of our
        LCD products of 85.5% as a result of our continued growth in the China market
        and expanded efforts in Australia, Korea, India and Southeast Asian countries.
        In addition, foreign currency translation had a positive impact on our net
        sales
        in the second quarter of 2007 due to a 4% stronger Chinese Yuan exchange
        rate
        against the U.S. dollar based on an average rate in the second quarter of
        2007
        compared to the second quarter of 2006. The increase was partially offset
        by a
        decrease in CRT unit shipments of 45.6% from the second quarter of
        2006.
 
 ***Income
        from operations***
 
 In
        our
        Asia-Pacific region, income from operations increased $2.9 million to $5.6
        million in the second quarter of 2007 from $2.7 million in the second quarter
        of
        2006. The increase was primarily due to the growth in net sales and higher
        gross
        margins as a result of geographic and product mix, lower inventory write-downs,
        gains related to the settlement of commercial litigation, and lower freight
        expenses. This increase was partially offset by higher selling, general and
        administrative expenses driven by an increase in account development fund
        expenses and personnel-related expenses as we continue to build our
        infrastructure to support our growing sales in the Asia-Pacific
        markets.
  
 **Comparison
        of the six months ended June 30, 2007 and 2006**
 
 
 **Six
                  months ended June 30,**
              
              
              **Increase
                  (decrease)****($
                  in thousands)**
              
              **2007**
              
              
              **2006**
              
              
              **$**
              
              
              
              **%**Net
                  sales:Americas
              
              $
              378,727
              
              
              $
              340,385
              
              
              $
              38,342
              
              
              
              11.3
              %EMEA
              
              
              157,494
              
              
              
              143,679
              
              
              
              13,815
              
              
              
              9.6Asia-Pacific
              
              
              297,484
              
              
              
              221,998
              
              
              
              75,486
              
              
              
              34.0$
              833,705
              
              
              $
              706,062
              
              
              $
              127,643
              
              
              
              18.1Income
                  (loss) from operations(1):Americas
              
              $
              1,642
              
              
              $
              7,131
              
              
              $
              (5,489
              )
              
              
              (77.0
              )EMEA
              
              
              49
              
              
              
              (7,653
              )
              
              
              7,702
              
              
              
              100.6Asia-Pacific
              
              
              8,965
              
              
              
              6,136
              
              
              
              2,829
              
              
              
              46.1Other(2)
              
              
              (413
              )
              
              
              (2,124
              )
              
              
              1,711
              
              
              
              *$
              10,243
              
              
              $
              3,490
              
              
              $
              6,753
              
              
              
              193.5
              %(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, EMEA
                  and
                  Asia-Pacific region, respectively.(2)  
                  Includes certain corporate expenses that were not allocated to
                  a specific
                  segment for management reporting purposes.*
                  Percentage not meaningful.
  17
 *Table
            of Contents*
  **Americas**
 
 ***Net
        sales***
  In
        our
        Americas region, net sales increased $38.3 million, or 11.3%, to $378.7 million
        in the first six months of 2007 from $340.4 million in the first six months
        of
        2006. The increase was primarily due to unit shipment growth in our LCD,
        LCD TV
        and projector products of 30.6%, 45.7% and 88.8%, respectively, driven by
        pricing strategies designed to gain market share and increase channel
        diversification. The increase was partially offset by lower CRT unit shipments
        of 63.6% and lower ASPs in our LCD, LCD TV and projector products compared
        to
        the first six months of 2006.
 
 ***Income
        from operations***
 
 In
        our
        Americas region, income from operations decreased $5.5 million to $1.6 million
        in the first six months of 2007 from $7.1 million in the first six months
        of
        2006 primarily due to lower gross margins as a result of 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
        and lower selling, general and administrative expenses due to a decrease
        in
        account development fund expenses, lower advertising expenses, lower incentive
        compensation as a result of lower operating performance and lower
        personnel-related costs.
 
 **EMEA**
 
 ***Net
        sales***
 
 In
        our
        EMEA region, net sales increased $13.8 million, or 9.6%, to $157.5 million
        in
        the first six months of 2007 from $143.7 million in the first six months
        of
        2006. The increase was primarily due to growth in our LCD, LCD TV and projector
        unit shipments of 36.2%, 125.1% and 68.8%, respectively, driven by channel
        diversification and increased expansion into Russia. The increase was partially
        offset by a decrease in CRT unit shipments of 51.0% and lower ASPs in our
        LCD
        and LCD TV products. Foreign currency translation had a positive impact on
        our
        net sales in the first six months of 2007 due to a 9% stronger Euro exchange
        rate against the U.S. dollar based on an average rate in the first six months
        of
        2007 compared to the prior year.
 
 ***Income
        (loss) from operations***
 
 In
        our
        EMEA region, income from operations increased $7.7 million to income of $49,000
        in the first six months of 2007 from a loss of $7.7 million in the first
        six
        months of 2006. The increase was primarily due to the increase in net sales,
        higher gross margins driven by lower product costs as a percentage of net
        sales, lower inventory write-downs, lower warranty costs due to lower defect
        rates and improved operating efficiencies and gains related to the settlement
        of
        commercial litigation. The increase was partially offset by higher selling,
        general and administrative expenses due to higher personnel-related expenses
        as
        a result of increased headcount and higher account development fund expenses
        in
        order to promote sales in a very competitive environment.
 
 **Asia-Pacific**
 
 ***Net
        sales***
 
 In
        our
        Asia-Pacific region, net sales increased $75.5 million, or 34.0%, to $297.5
        million in the first six months of 2007 from $222.0 million in the first
        six
        months of 2006. The increase was primarily due to an increase in unit shipments
        of our LCD products of 88.0% driven by our continued growth in the China
        market
        and expanded efforts in Australia, Korea, India and Southeast Asia countries.
        In
        addition, foreign currency translation had a positive impact on our net sales
        in
        the first six months of 2007 due to a 4% stronger Chinese Yuan exchange rate
        against the U.S. dollar based on an average rate in the first six months
        of 2007
        compared to the first six months of 2006. The increase was partially offset
        by a
        decrease in CRT unit shipments of 41.5% and lower ASPs in our LCD, LCD TV,
        projector and CRT products.
 
 ***Income
        from operations***
 
 In
        our
        Asia-Pacific region, income from operations increased $2.8 million to $9.0
        million in the first six months of 2007 from $6.1 million in the first six
        months of 2006. The increase was primarily due to the increase in net sales
        and
        gains related to the settlement of commercial litigation, partially offset
        by
        higher selling, general and administrative expenses as a result of higher
        account development fund 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)*
              
              **Six
                  months ended June 30,****2007**
              
              
              **2006**Net
                  cash used in operating activities
              
              $
              (8,970
              )
              
              $
              (9,077
              )Net
                  cash used in investing activities
              
              
              (6,372
              )
              
              
              (7,370
              )Net
                  cash provided by (used in) financing activities
              
              
              18,654
              
              
              
              (10,726
              )Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              573
              
              
              
              108Net
                  increase (decrease) in cash and cash equivalents
              
              $
              3,885
              
              
              $
              (27,065
              )
 
 As
        of
        June 30, 2007, we had cash and cash equivalents of $73.0 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.
        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, EMEA and
        Asia-Pacific regions that we believe are adequate to meet our cash flow
        needs.
 
 ***Operating
        activities***
 
 Cash
        used
        in operating activities was $9.0 million in the first six months of 2007
        compared to $9.1 million in the first six months of 2006. The decrease in
        operating cash flow in the first six months of 2007 was primarily due to
        cash
        used for our working capital needs. Our cash conversion cycle remained flat
        at ten days at June 30, 2007 and December 31, 2006. Our days of sales
        outstanding increased from 41 days at December 31, 2006 to 48 days at June
        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 second
        quarter of 2007 compared to the fourth quarter of 2006. Our days in inventory
        increased from 32 days at December 31, 2006 to 34 days at June 30, 2007.
        Our
        days of accounts payable outstanding increased from 63 days at December 31,
        2006
        to 72 days at June 30, 2007 primarily due to the timing of product purchases
        and
        when payments were made.
  18
 *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. We believe this is
        a
        more accurate presentation of our cash conversion cycle. Product component
        revenues and costs are presented as a net amount in cost of sales in our
        condensed consolidated statements of operations.
 
 ***Investing
        activities***
 
 Cash
        used
        in investing activities was $6.4 million in the first six months of 2007
        compared to $7.4 million in the first six months of 2006. The use of cash
        in the
        first six 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 $18.7 million in the first six months
        of
        2007 compared to cash used in financing activities of $10.7 million in the
        first
        six months of 2006. In the first six months of 2007, we had net borrowings
        of
        $18.6 million compared to $4.2 million in the prior year. In addition, we
        redeemed all outstanding shares of our Series B Preferred Stock for $15.0
        million in the prior year.
 
 **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% (8.75% at
        June 30, 2007 and December 31, 2006) 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 June 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 August 2007. This line-of-credit is secured by
        trade receivables and inventory of ViewSonic Europe Limited. Advances bear
        interest at LIBOR plus a margin (7.57% and 7.58% as of June 30, 2007 and
        December 31, 2006, respectively). We are currently looking into additional
        credit facilities to meet our current and future working capital needs.
        Outstanding borrowings against this facility were $11.6 million and $0 as
        of
        June 30, 2007 and December 31, 2006, respectively. We may be unable to extend
        this credit facility or find a replacement facility on substantially similar
        terms.
 
 Certain
        of our other Asia-Pacific subsidiaries also have line-of-credit facilities
        with
        various financial institutions that expire through March 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
        $8.7
        million and $23.7 million at June 30, 2007 and December 31, 2006, respectively.
        These lines of credits had a weighted average interest rate of 5.82% and
        7.23%
        at June 30, 2007 and December 31, 2006, respectively. We are currently looking
        into additional credit facilities to meet our current and future working
        capital
        needs. As of June 30, 2007 and December 31, 2006, there were outstanding
        cash advances of $7.4 million and $0.3 million, respectively. We may be unable
        to extend these credit facilities or find replacement facilities on
        substantially similar terms.
  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 June 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 June 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.
  As
        of
        June 30, 2007, we were in compliance with the covenants of all our borrowing
        arrangements.
 
 **Off-balance
        sheet arrangements**
 
 During
        the first six 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 June 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
        in
        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.
 
 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 for the three and six
        months
        ended June 30, 2007 was $0.1 million and $0.3 million,
        respectively.
 
 As
        of
        June 30, 2007, our total FIN 48 liability for uncertain tax positions was
        $4.3
        million. We are unable to reasonably estimate the timing of future cash flows
        related to the $4.3 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, which trend we expect
        to
        increase to the extent we are successful in increasing sales of our LCD TV
        products. Our seasonality is moderated through slightly different seasonal
        variations in our three regions.
 
 **Operating
        capital and capital expenditure requirements**
  19
 *Table
            of Contents*
 
 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.
 
 **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 Fin**ancial 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-Pacific 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 second quarter and first six months of 2007, the Euro-to-U.S.
        dollar
        foreign currency exchange rate strengthened against the U.S. dollar increasing
        8% and 9%, respectively, compared to the average during the second quarter
        and
        first six months of 2006. The strengthening of the Euro positively impacted
        our
        net sales and income from operations by $1.6 million and $0.9 million,
        respectively, in the second quarter of 2007 and $4.9 million and
        $3.0 million, respectively, in the first six months of 2007 over the prior
        year assuming all other factors remained constant. During the second quarter
        and
        first six months of 2007, the Chinese Renminbi-to-U.S. dollar foreign currency
        exchange rate strengthened against the U.S. dollar increasing 4% compared
        to the
        average during the second quarter and first six months of 2006. The
        strengthening of the Chinese Renminbi positively impacted our net sales and
        income from operations by $3.7 million and $3.4 million, respectively,
        in the second quarter of 2007 and $6.2 million and $5.8 million,
        respectively, in the first six months of 2007 over the prior year assuming
        all
        other factors remained constant. As of June 30, 2007, 23% 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 June 30, 2007 that have materially affected, or are reasonably
        likely to materially affect, our internal controls over financial
        reporting.
 
 
 **Part
        II**
 
 **Other
        information**
 
 **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.
  20
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            of Contents*
  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.
        Trial will not be held before March 8, 2008. 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 Vie**wSonic 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
        these
        post-trial proceedings 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 the post-trial
        proceedings in Case No. CV-02-6775 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
        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 in the U.S. District
        Court, District of Delaware, 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 our 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
        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.
 
 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.
        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.
 
 **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.*
 
 ***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.***
 
 We
        have
        experienced significant growth in a short period of time. Our revenues increased
        from $379.3 million in the second quarter of 2006 to $423.9 million in the
        second quarter of 2007 and from $706.1 million in the first six months of
        2006
        to $833.7 million in the first six months of 2007. We may not achieve similar
        or
        any growth in future periods. You should not rely on our operating results
        for
        any prior quarterly or annual periods as an indication of our future operating
        performance.
 
 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;
  21
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  *•***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;
 
 *•***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. As a result,
        we
        are particularly vulnerable to fluctuations in demand for these products,
        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 as such replacement
        becomes largely complete our sales could be harmed.
 
 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 11.2% in the second quarter of 2007 compared to
        the
        second quarter of 2006 and declined 15.7% in the first six months of 2007
        compared to the first six 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 decreased 11.2% in the second quarter of 2007 compared
        to
        the second quarter of 2006 and declined 15.7% in the first six months of
        2007
        compared to the first six 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.
 
 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.***
  22
 *Table
            of Contents*
  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.
 
 ***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 under-utilized 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.
  23
 *Table
            of Contents*
  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.
 
 ***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 68% of our total consolidated net sales from customers outside
        of the
        United States in the second quarter of 2007 and 65% in the first six 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 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.
 
 ***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;
  24
 *Table
            of Contents*
  *•***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.
 
 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 second
        quarter and first six 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;
  25
 *Table
            of Contents*
  *•***Unexpected
        reductions in payment terms;
 
 *•***Interruptions
        in shipments if one of our manufacturers is unable to complete production
        or
        experiences delays;
 
 *•***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.
 
 ***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, and anticipated
        cash flows from operations will be sufficient to meet our operating and capital
        requirements for at least the next 12 months, we may be unable to extend or
        renew our existing credit facilities on substantially similar terms. In
        addition,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;
  26
 *Table
            of Contents*
  *•***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,
 
 *•***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.
  27
 *Table
            of Contents*
  **Item
        4. Submission of matters to a vote of securities
        holders**
 
 Not
        applicable.
 
 **Item
        5. Other information**
 
 Not
        applicable.
 
 **Item
        6.  Exhibits**
 
 **Exhibit
                  No.**
              
              **Description
                  of Exhibits**10.19(1)
              
              Letter
                  Agreement between ViewSonic Europe Limited and Burdale Financial
                  Limited,
                  dated June 22, 2007.10.24(2)
              
              ViewSonic
                  2007 Management Incentive Plan.10.31(3)
              
              Offer
                  Letter by and between ViewSonic Corporation and Theodore R. Sanders,
                  dated
                  June 3, 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, (000-50730), filed with the Securities and Exchange Commission
                  on June 28, 2007.(2)
              
              Incorporated
                  by reference to Exhibit 10.24 to ViewSonic Corporation's Current
                  Report on
                  Form 8-K, (000-50730), filed with the Securities and Exchange Commission
                  on May 14, 2007.(3)
              
              Incorporated
                  by reference to Exhibit 10.31 to ViewSonic Corporation's Current
                  Report on
                  Form 8-K, (000-50730), filed with the Securities and Exchange Commission
                  on June 11, 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.
  28
 *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 August 14, 2007.
  **ViewSonic
                  Corporation**By:
              /s/
                  Theodore R. SandersTheodore
                  R. SandersChief
                  Financial Officer(*Principal
                  Financial and Accounting
                  Officer*)
  29
 *Table
            of Contents*
  
 **Exhibit
        index**
  **Exhibit
                  No.**
              
              **Description
                  of Exhibits**10.19(1)
              
              Letter
                  Agreement between ViewSonic Europe Limited and Burdale Financial
                  Limited,
                  dated June 22, 2007.10.24(2)
              
              ViewSonic
                  2007 Management Incentive Plan.10.31(3)
              
              Offer
                  Letter by and between ViewSonic Corporation and Theodore R. Sanders,
                  dated
                  June 3, 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, (000-50730), filed with the Securities and Exchange Commission
                  on June 28, 2007.
 
 (2)
              Incorporated
                  by reference to Exhibit 10.24 to ViewSonic Corporation's Current
                  Report on
                  Form 8-K, (000-50730), filed with the Securities and Exchange Commission
                  on May 14, 2007.
 
 (3)
              Incorporated
                  by reference to Exhibit 10.31 to ViewSonic Corporation's Current
                  Report on
                  Form 8-K, (000-50730), filed with the Securities and Exchange Commission
                  on June 11, 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.
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