Computer Associates 2011 Annual Report Download - page 26

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Certain software that we use in our products 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, could
materially adversely affect our business, financial condition, operating results and cash flow.
Some of our solutions contain software licensed from third parties. Some of these licenses may not be available to us in the
future on terms that are acceptable to us or allow our products to remain competitive. The loss of these licenses or the
inability to maintain any of them on commercially acceptable terms could delay development of future products or the
enhancement of existing products. We may also choose to pay a premium price for such a license in certain circumstances
where continuity of the licensed product would outweigh the premium cost of the license. The unavailability of these licenses
or the necessity of agreeing to commercially unreasonable terms for such licenses could materially adversely affect 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
unintended consequences and, therefore, could materially adversely affect our business, financial condition,
operating results and 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 of our products to unintended conditions, which could require us to take remedial action
that may divert resources away from our development efforts and therefore could materially adversely affect our business,
financial condition, operating results and cash flow.
Discovery of errors in our software could materially adversely affect our revenue and earnings and subject us to
costly and time consuming product liability claims.
The software products we offer are inherently complex. Despite testing and quality control, we cannot be certain that errors
will not be found in current versions, new versions or enhancements of our products after commencement of commercial
shipments. If new or existing customers have difficulty deploying our products or require significant amounts of customer
support, our operating margins could be adversely affected. Moreover, we could face possible claims and higher development
costs if our software contains errors that we have not detected or if our software otherwise fails to meet our customers’
expectations. Significant technical challenges also arise with our products because our customers license and deploy our
products across a variety of computer platforms and integrate them with a number of third-party software applications and
databases. These combinations increase our risk further because, in the event of a system-wide failure, it may be difficult to
determine which product is at fault. As a result, we may be harmed by the failure of another supplier’s products. As a result
of the foregoing, we could experience:
•Loss of or delay in revenue and loss of market share;
•Loss of customers, including the inability to obtain repeat business with existing key customers;
•Damage to our reputation;
•Failure to achieve market acceptance;
•Diversion of development resources;
•Increased service and warranty costs;
•Legal actions by customers against us that could, whether or not successful, be costly, distracting and time-consuming;
•Increased insurance costs; and
•Failure to successfully complete service engagements for product installations and implementations.
Consequently, the discovery of errors in our products after delivery could materially adversely affect our business, financial
condition, operating results and cash flow.
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