Good Morning, Computer Associates

 
 
By eweek  |  Posted 2001-09-04 Email Print this article Print
 
 
 
 
 
 
 

Whatever doesn't kill you makes you stronger. The Computer Associates International we knew just a few short months ago and the CA we know now are drastically different.

That which does not kill you, makes you stronger. After two months of battling against Texas billionaire Sam Wyly and the other Ranger Governance investors - who originally fought to replace the entire board of directors and then resigned to fight for four of the 10 seats, including that of Chairman Charles Wang - Computer Associates International came out on top by a 3-to-1 margin in the preliminary shareholder vote tally.
However, the CA we knew just a few short months ago and CA we know now are drastically different. The easiest way to make my point is to compare CA before proxy and after proxy, which well call BP and AP. Who knows - maybe years from now, well refer to the history of the company in these very terms.
BP: Only mainframe specialists and research scientists could explain to you exactly what the heck the fourth largest software company in the world sold to people. I often wondered how someone could actually purchase a CA product without knowing what it was. AP: CA has streamlined its 1,244 solutions into four distinct product groups: Brightstor for storage management; eTrust for security; Jasmine for application development and integration, with some tasty portal treats sprinkled on top; and Unicenter as the CA flagship network management platform. BP: CA instituted pro-forma accounting practices for reporting revenue - which made it seem like CA was putting away more money than it actually was - while the investment community cried foul.
AP: President and CEO Sanjay Kumar plans to end the practice of pro-forma accounting at the end of fiscal 2002, the first full year CA will be able to record under its new business plan that sells software as a monthly service, rather than a one-time licensing fee. BP: CA was receiving bad marks from customers on service issues. Nearly every analyst firm, from Gartner to Giga Information Group, had completed customer surveys that revealed service issues that made the Internal Revenue Service look like a high-touch organization. AP: Kumar has made it his personal goal to institute a new client relations organization, comprising 650 highly-trained personnel that earn commission on nothing more than a customers complete and utter satisfaction. BP: Most of the dominant members of the companys board of directors were perceived to have too much control over where the CAs future was heading. AP: Wang has made it a top priority to bring on at least one - if not two - new, independent board members before the champagne corks pop on New Years Eve. Now, some of these initiatives were announced before the proxy battle began, but CA never fully explained how important they were to the company, and not many people even knew about them. After the shareholder meeting last week and the subsequent proxy vote that ruled in favor of CAs current board, it was difficult to tell who was more downtrodden from the fight - Wyly or Wang. Wang called the ordeal a "sobering experience," while Wyly acted like it was a much closer contest than the 3-to-1 voting results would indicate. Thats because it was. Consider this: Nearly 20 percent of shareholders didnt vote at all. Another 30 percent of the vote is controlled by the current board and Walter Haefner, the largest shareholder of the company who stated when this thing began that he would not change horses in midstream. That leaves 50 percent controlled by institutional and individual investors, as well as company employees. Wylys Ranger Governance got almost half that vote. So those investors who actually voted and didnt have a controlling stake in the company split almost down the middle. And thats why Wang looked so harried. Thats why Kumar was on the defensive at CA World, CAs annual customer convention in July and the shareholder meeting last week in Islandia, N.Y. More than anyone ever gave it credit for, Ranger Governance made some points about CAs business practices that resounded throughout the investor, customer and employee community. But give Wang and Kumar credit. They listened and acted. And CA is not a company new to change. It wouldnt still be around after 25 years if it was. When it came time to move from mainframe to client/server, CA was there. When it came time to move business to the Internet, CA was there. CA was the first large software company to institute artificial intelligence to help businesses run better. And when it came time to embrace more platforms such as Linux, CA was there. Despite IBMs vast advertising campaign of peace, love and the penguin, CA boasts more software that actually runs on Linux. Speaking of Big Blue - CAs largest competitor - IBM execs should be the ones really frightened now that the proxy battle is over. In the words of a Japanese general when he was done bombing Pearl Harbor at the end of the 2001 film of the same name, Ranger Governance just "awakened a sleeping giant." Its time for breakfast.
 
 
 
 
 
 
 
 
 
 
 

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