Computer Associates 2007 Annual Report Download - page 28

North America and worldwide human resources. A second major phase of SAP was implemented in November 2006, which
included operating activities in our CA Technology Services business. Any delay in the implementation of, or disruption in the
transition to, our new or enhanced systems, procedures or internal controls, could adversely affect our ability to accurately
forecast sales demand, manage our supply chain, achieve accuracy in the conversion of electronic data and records, and report
financial and management information, including the filing of our quarterly or annual reports with the SEC, on a timely and
accurate basis. As a result of the conversion from prior systems and processes, data integrity problems may be discovered
that if not corrected could impact our business or financial results. In addition, as we add functionality to the ERP software and
complete implementations in other geographic regions, new issues could arise that we have not foreseen. Such issues could
adversely affect our ability to do, among other things, the following in a timely manner: provide quotes; take customer orders;
ship products; provide services and support to our customers; bill and track our customers; fulfill contractual obligations; and
otherwise run our business. Failure to properly or adequately address these issues could result in the diversion of
management’s attention and resources, impact our ability to manage our business and negatively impact our results of
operations, cash flows and stock price. See Item 4, “Controls and Procedures”, for further information.
We may encounter difficulties in successfully integrating companies and products that we have acquired or may acquire
into our existing business and, therefore, such failed integration may adversely affect our infrastructure, market presence,
results of operations and stock price.
We have in the past and expect in the future to acquire complementary companies, products, services and technologies. The
risks we may encounter include: we may find that the acquired company or assets do not further improve our financial and
strategic position as planned; we may have difficulty integrating the operations, personnel and commission plans of the
acquired business; we may have difficulty forecasting or reporting results subsequent to acquisitions; we may have difficulty
retaining the technical skills needed to provide services on the acquired products; we may have difficulty incorporating the
acquired technologies or products with our existing product lines; we may have product liability, customer liability or
intellectual property liability associated with the sale of the acquired company’s products; our ongoing business may be
disrupted by transition or integration issues; our management’s attention may be diverted from other business concerns; we
may be unable to obtain timely approvals from governmental authorities under applicable competition and antitrust laws; we
may have difficulty maintaining uniform standards, controls, procedures and policies; our relationships with current and new
employees, customers and distributors could be impaired; the acquisition may result in increased litigation risk, including
litigation from terminated employees or third parties; and our due diligence process may fail to identify significant issues with
the target company’s product quality, financial disclosures, accounting practices, internal control deficiencies, including
material weaknesses, product architecture, legal contingencies and other matters.These factors could have a material adverse
effect on our business, results of operations, financial condition or cash flows, particularly in the case of a large acquisition or
number of acquisitions. To the extent we issue shares of stock or other rights to purchase stock, including options, to pay for
acquisitions, existing stockholders’ interests may be diluted and earnings per share may decrease.
We are subject to intense competition in product and service offerings and pricing, and we expect to face increased
competition in the future, which could diminish demand for our products and, therefore, reduce our sales, revenue and
market presence.
The markets for our products are intensely competitive, and we expect product and service offerings and pricing competition
to increase. Some of our competitors have longer operating histories, greater name recognition, a larger installed base of
customers in any particular market niche, larger technical staffs, established relationships with hardware vendors and/or
greater financial, technical and marketing resources. Competitors for our various products include large technology
companies. We also face competition from numerous smaller companies that specialize in specific aspects of the highly
fragmented software industry and shareware authors that may develop competing products. In addition, new companies enter
the market on a frequent and regular basis, offering products that compete with those offered by us. Moreover, many
customers historically have developed their own products that compete with those offered by us. The competition may affect
our ability to attract and retain the technical skills needed to provide services to our customers, forcing us to become more
reliant on delivery of services through third parties. This, in turn, could increase operating costs and decrease our revenue,
profitability and cash flow. Additionally, competition from any of these sources can result in price reductions or displacement
of our products, which could have a material adverse effect on our business, financial condition, operating results and cash
flow.
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