Computer Associates on Wednesday announced a restructuring plan that will lay off 800 employees, or about 5 percent of its workforce, with 550 of the 800 reductions to take place in North America.
The plan is expected to bring $70 million in savings on an annualized basis to Islandia, N.Y.-based Computer Associates International Inc., once the layoffs are completely implemented. The plan will cost about $40 million, or 4 cents per fully diluted common share. The majority of the charge should occur in the second quarter of fiscal year 2005.
Yet, where there is labor reduction at CA, there is also labor growth.
In a recent eWEEK article detailing the initial plan for layoffs at CA, a company representative said CA was planning to add 400 to 600 positions at its development center in India.
Chief operating officer Jeff Clarke said at the companys Wednesdays news conference that CA “will continue adding staff in our Tampa and Barcelona, Spain, call centers.”
“Development will continue with its existing plans for India,” Clarke said.
The enterprise software makers labor reductions come in a year filled with an investigation of its accounting practices, the indictments and resignations of several senior executives—including former CEO Sanjay Kumar—and a subsequent deferred prosecution deal reached last week with the U.S. Securities and Exchange Commission.
Computer Associates CEO Kenneth Cron said the layoffs will not harm the companys recent deal with the SEC. “This restructuring will have no effect on our ability to fulfill the obligations of the deferred prosecution agreement announced last week. There is nothing more important to us, and we are committed to fulfilling every requirement,” Cron said.
The workforce cuts, which will affect almost every department, are intended to “focus on driving marketing efficiencies, … improving productivity and simplifying the product portfolio,” according to the companys news release, which did not detail what products would be affected.
“In product development, we will refocus our efforts and our budget dollars on advancing those products with the highest likelihood for success in the markets that are most critical to our customers,” COO Clarke said.
“For example, this summer, CA created the Managed Products Group to effectively manage the legacy products that are important to our customers but are nearing the end of their commercially productive life.”
When asked Wednesday about a recent eWEEK story in which a source claimed that CA has cut products for the IBM VSE mainframe environment, a company representative replied, “We continue to apply appropriate development and support resources to our customers needs. VSE platform continues to be an important platform for CA and our customers.”