Irony in the Wrongdoing
The irony in CAs wrongdoingbooking revenue from contracts signed after the close of the quarter into the previous quarteris that it is now markedly less attractive under the deferred-revenue recognition model adopted three years ago by Kumar, the polished protégé of CA founder Charles Wang. After that change was implemented, CA went from a $6 billion company to a $3 billion company, according to Doug Robinson, interim CFO prior to CAs hiring of Hewlett-Packard Co.s Jeff Clarke for that role earlier this month."While we go through this transition and build back comparability, Wall Street is very uneasy," said Robinson, now CAs senior vice president of finance. "Analysts still look at our peers using metrics CA doesnt compare to."The change to the deferred-revenue recognition model, said company insiders, was also a defining moment that distinguished the Kumar era from the Wang era. Since becoming CEO, Kumar has managed to remake the board of directors, improve customer satisfaction, initiate and survive a change in how revenue is recognized, fend off two proxy battles over control of the company, and create a culture of innovation and openness, CA insiders said. Still, Kumar may suffer from the sins of CAs past, users said. "I think the decent people with CA are paying for mistakes other people have made, like with the Enrons and other [scandal-ridden companies] all over the world," said longtime CA BrightStor user John Stacey, president of the Lexington, Mass., network consultancy Djamalov Inc. "Its like the old analogy: One bad apple ..." "You have someone who may or may not have been part of the mess but has been part of the solution. Its not all white and black hats. There are a lot of gray ones, too," said Jasmine Noel, an analyst at Ptak, Noel & Associates, in Boston. "The sad thing is that Sanjay was the driving force behind a lot of [positive] changes. Thats what the customers think." Next page: CA stays focused.