Computer Associates 2010 Annual Report Download - page 22

investments). Additionally, we expect to acquire technology and software that are consistent with our growth strategy. 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, facilities, 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 skills needed to further market, sell or provide services on the acquired products in a
manner that will be accepted by the market;
•We may have difficulty incorporating the acquired technologies or products into 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 and our management’s attention may be
diverted from other business initiatives;
•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;
•An 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 acquired 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 and cash flow,
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 or to retain employees, existing stockholders’ interests may be
diluted and net income 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 either diminish demand for or inhibit growth of 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, or greater
financial, technical and marketing resources. Furthermore, our growth strategy is predicated upon our ability to develop and
acquire products and services that address customer needs and are accepted by the market better than those of our
competitors.
We also face competition from numerous smaller companies that specialize in specific aspects of the highly fragmented
software industry, and from 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, certain 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 could 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.
Our competitors include large vendors of hardware and operating system software and service providers. The widespread
inclusion of products that perform the same or similar functions as our products bundled within computer hardware or other
companies’ software products, or services similar to those provided by us, could reduce the perceived need for our products
11