Computer Associates 2005 Annual Report Download - page 76

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Table of Contents
circumstances where continuity of the product would outweigh the premium cost of the license. We do not consider the revenue from
products using software licensed from third parties to be material. However, there can be no assurance that at a given point of time, any
of the above will not have an adverse impact on our business, financial condition, operating results, and cash flow.
Certain software we use is from open source code sources which under certain circumstances may lead to increased costs and, therefore,
decreased cash flow.
Some of our products contain software from open source code sources. The use of such open source code may subject us to certain
conditions, including the obligation to offer our products that use open source code for no cost. We monitor our use of such open source
code to avoid subjecting our products to conditions we do not intend. However, the use of such open source code may ultimately subject
some product(s) to unintended conditions so that we are required to take remedial action that may divert resources away from our
development efforts. We believe that the use of such open source code will not have a significant impact on our operations and that our
products will be viable after any remediation efforts. However, there can be no assurance that future conditions involving such open
source code will not have an adverse impact on our business, financial condition, operating results, and cash flow.
If our products do not remain compatible with ever-changing operating environments we could lose customers and the demand for our
products and services could decrease, which would negatively impact sales and revenue.
IBM, HP, Sun Microsystems, and Microsoft are the largest suppliers of systems and computing software and, in most cases, are the
manufacturers of the computer hardware systems used by most of our customers. Historically, these operating system developers have
modified or introduced new operating systems, systems software, and computer hardware. Such new products could, in the future,
incorporate features that perform functions currently performed by our products, or could require substantial modification of our
products to maintain compatibility with these companies’ hardware or software. Although we have to date been able to adapt our
products and our business to changes introduced by hardware manufacturers and system software developers, there can be no assurance
that we will be able to do so in the future. Failure to adapt our products in a timely manner to such changes or customer decisions to
forego the use of our products in favor of those with comparable functionality contained either in the hardware or operating system could
have a material adverse effect on our business, financial condition, operating results, and cash flow.
Failure to timely adapt to technological change could adversely affect our revenues and earnings.
If we fail to keep pace with technological change in our industry, such failure would have an adverse effect on our revenues and earnings.
We operate in a highly competitive industry characterized by rapid technological change, evolving industry standards, changes in
customer requirements and frequent new product introductions and enhancements. During the past several years, many new
technological advancements and competing products entered the marketplace. The distributed systems and application management
markets in which we operate are far more crowded and competitive than our traditional mainframe systems management markets. Our
ability to compete effectively and our growth prospects depend upon many factors, including the success of our existing distributed
systems products, the timely introduction and success of future software products, and the ability of our products to interoperate and
perform well with existing and future leading databases and other platforms supported by our products. We have experienced long
development cycles and product delays in the past, particularly with some of our distributed systems products, and expect to have delays
in the future. Delays in new product introductions or less-than-anticipated market acceptance of these new products are possible and
would have an adverse effect on our revenues and earnings.
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