CA Cant Hide Past Behind Name Change

 
 
By John Pallatto  |  Posted 2005-06-29 Email Print this article Print
 
 
 
 
 
 
 

Opinion: A simple name change won't enable Computer Associates to bury the memories of a costly accounting fraud scandal. Only a sustained track record of corporate honesty and real shareholder value can do that.

Hoping to present a new face to the world, Computer Associates International, the company with one of the longest monikers in the industry, is considering officially hacking its name down to two stark letters: "CA." This is hardly a major change, since the company has been using its CA initials in its advertising, press releases, correspondence and marketing materials for years. Its Internet domain has always been http://www.ca.com. The people most likely to rejoice at an official change will be the headline writers and reporters of the world who found the full name was the bane of tightly worded headlines or news story leads. The only time Computer Associates was used in a headline was when the use of small type provided plenty of line space.
But the company plans to launch an international advertising campaign aimed at C-level executives that is designed to "build brand credibility and awareness of the new face of CA, " according to company officials.
The goal of the company is to highlight its current focus on IT systems management and security by presenting the message that "CA provides software and expertise that simplifies, automates and secures" customers IT investment. The ad campaign will distill the message to three words: "simplify, automate, secure." Click here to read about the hiring of former IBM executive John Swainson as CAs new CEO. The company estimates that the global advertising campaign will cost $7 million and generate more than 100 million print and online impressions.
But the main reason the company needs to present a new face is that its top management has been completely changed as the result of an accounting scandal that required the company to restate earnings to the tune of $2.2 billion. The scandal forced the resignation of CA Chairman and CEO Sanjay Kumar. Other former executives pleaded guilty to securities fraud charges, including Stephen Woghin, CAs former general counsel; Ira Zar, a former chief financial officer; and two finance vice presidents, David Kaplan and David Rivard. The cost of the ad campaign is tiny compared with what the company paid to settle securities fraud charges, including $225 million in restitution to current and former investors. Corporate name changes that dont take place as a result of a merger or acquisition are rare, and thats because they are risky, even when a company is trying to help people forget about a troubled past. Companies invest huge amounts of money establishing their corporate identity because they want their names to be synonymous with their products and they want that name to be foremost in the memory of customers. CA apparently considered a complete name change to distance itself from the recent past but decided that customers didnt believe the accounting scandal was so egregious that it required a total marketing makeover. Anyone who has passed Branding 101 knows that its unwise for a 29-year-old company to change its name without potentially losing recognition or acceptance in the marketplace. For CA to change its name would probably work no better than when the Coca-Cola Co. announced that it was going to change the flavor of its classic Coke soft drinks. Click here to read John Pallattos commentary on how CA settled federal securities fraud charges. Its hard for customers to forget a company that sells more than 1,000 different software and IT products worldwide. But in CAs case, a name change would more likely prompt customers to forget about the company before they forgot about the accounting scandal. Only time and good corporate behavior will enable CA to bury the past. Permanent abandonment of the arrogant corporate culture that encouraged top management to pander to Wall Street analysts and investors by sugar-coating financial results is the best way to prove that the company is determined to stay honest. John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at john_pallatto@ziffdavis.com. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.
 
 
 
 
John Pallatto John Pallatto is eWEEK.com's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.
 
 
 
 
 
 
 

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