Computer Associates 2005 Annual Report Download - page 75

Table of Contents
of electronic data and records, report financial and management information on a timely and accurate basis, and could potentially
constitute a breach of the terms of the DPA. In addition, as we add additional functionality, new problems could arise that we have not
foreseen. Such problems could adversely impact our ability to do 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 our results of operations, cash flows, and our stock price could be
negatively impacted.
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 and personnel of the acquired business; 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 hinder our ability to attract and retain employees and 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, 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 and shareware authors that may develop competing
products. 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.
Our competitors include large vendors of hardware or operating system software. The widespread inclusion of products that perform the
same or similar functions as our products within computer hardware or other companies’ software products could reduce the perceived
need for our products and services, or render our products obsolete and unmarketable. Furthermore, even if these incorporated products
are inferior or more limited than our products, customers may elect to accept the incorporated products rather than purchase our products.
In addition, the software industry is currently undergoing consolidation as software companies seek to offer more extensive suites and
broader arrays of software products, as well as integrated software and hardware solutions. This consolidation may negatively impact
our competitive position, which could adversely affect our business, financial condition, operating results, and cash flow. Refer to Item 1,
“Business – Competition,” for additional information.
Certain software that we use in daily operations is licensed from third parties and thus may not be available to us in the future, which has
the potential to delay product development and production and, therefore, decrease revenues and profits.
Some of our products contain software licensed from third parties. Some of these licenses may not be available to us in the future on
terms that are acceptable or allow our products to remain competitive. The loss of these licenses or the ability to maintain any of them on
commercially acceptable terms could delay development of future products or enhancement of existing products. We may also choose to
pay a premium price for such a license in certain
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