Computer Associates 2006 Annual Report Download - page 38

included operating activities in North America and worldwide human resources. 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.
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 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, 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.
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