Computer Associates 2012 Annual Report Download - page 22

•Restrictive employment regulation;
•Trade restrictions such as tariffs, duties, taxes or other controls;
•International intellectual property laws, which may be more restrictive or may offer lower levels of protection than U.S. law;
•Complying with differing and changing local laws and regulations in multiple international locations as well as complying with
U.S. laws and regulations where applicable in these international locations; and
•Developing and executing an effective go-to-market strategy in various locations.
Any of the foregoing factors could materially adversely affect our business, financial condition, operating results and cash flow.
General economic conditions and credit constraints, or unfavorable economic conditions in a particular region,
business or industry sector, may lead our customers to delay or forgo technology investments and could have
other impacts, any of which could materially adversely affect our business, financial condition, operating results
and cash flow.
Our products are designed to improve the productivity and efficiency of our customers’ information processing resources. However, a
general slowdown in the global economy, or in a particular region (such as Europe), or disruption in a business or industry sector
(such as the financial services sector), or tightening of credit markets, could cause customers to: have difficulty accessing credit
sources; delay contractual payments; or delay or forgo decisions to (i) license new products (particularly with respect to discretionary
spending for software), (ii) upgrade their existing environments or (iii) purchase services. Any such impacts could materially
adversely affect our business, financial condition, operating results and cash flow.
Such a general slowdown in the global economy may also materially affect the global banking system, including individual
institutions as well as a particular business or industry sector, which could cause further consolidations or failures in such a sector.
Approximately one third of our revenue is derived from arrangements with financial institutions (i.e., banking, brokerage and
insurance companies). The majority of these arrangements are for the renewal of mainframe capacity and maintenance associated
with transactions processed by our financial institution customers. While we cannot predict what impact there may be on our business
from further consolidation of the financial industry sector, or the impact from the economy in general on our business, to date the
impact has not been material to our balance sheet, results of operations or cash flows. The vast majority of our subscription and
maintenance revenue in any particular reporting period comes from contracts signed in prior periods, generally pursuant to contracts
ranging in duration from three to five years.
Any of these events could affect the manner in which we are able to conduct business, including within a particular industry sector or
market and could materially adversely affect our business, financial condition, operating results and cash flow.
Failure to adapt to technological changes and introduce new software products and services in a timely manner
could materially adversely affect our business.
If we fail to keep pace with, or in certain cases lead, technological change in our industry, that failure could materially adversely
affect our business. We operate in a highly competitive industry characterized by rapid technological change, evolving industry
standards, and changes in customer requirements and delivery methods. 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 for all of our products, including those associated with our business
strategy, depend upon many factors, including the success of our existing distributed systems products, the timely introduction and
success of future software products and related delivery methods, and the ability of our products to perform well with existing and
future leading databases and other platforms supported by our products that address customer needs and are accepted by the market.
We have experienced long development cycles and product delays in the past, particularly with some of our distributed systems
products, and may experience delays in the future. In addition, we have incurred, and expect to continue to incur, significant research
and development costs as we introduce new products and integrate products into solution sets. If there are delays in new product
introduction or solution set integration, or if there is less-than-anticipated market acceptance of these new products or solution sets,
we will have invested substantial resources without realizing adequate revenues in return, which could materially adversely affect our
business, financial condition, operating results and cash flow.
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