CAs Kumar Knocks Protectionism, Oracle Takeover

Computer Associates CEO Sanjay Kumar on Monday blasted protectionist politics and Oracle's takeover practices to the crowd at the Software 2004 conference.

SAN FRANCISCO—Economic globalization and the overseas migration of service and information industry jobs is a fact of life, said Computer Associates CEO Sanjay Kumar to the Software 2004 conference here on Monday. The executive added that protectionist economic policies arent going to solve the problem..

The job of virtually anyone who "works behind a computer screen" but especially those involved in call center, technical support and software development can potentially see those jobs go overseas, Kumar said during a question and an answer session .

Governments best approach is to offer tax breaks and other business-friendly policies to encourage the technical innovation that will create the skilled jobs of the future, Kumar said.

Computer Associates International Inc., based in Islandia, New York, has been doing off-shore development for more than 18 years, Kumar said. The company employs developers in Australia, Europe, China as well as the United States, he noted. Companies will always tend to go "where the talent is" he said, but Computer Associates high level software design and development will remain focused at its U.S. headquarters, he said.

CA has gotten out of the applications business since Kumar became CEO in 2000. He said he made the decision mainly because CA was never a professional services company and couldnt efficiently provide the level of product customization that enterprise buyers required.

He wanted the company to instead focus on IT management and security systems that didnt require it to be a professional services company.

Kumar also criticized the way that Oracle Corp. pursued its attempted hostile takeover of PeopleSoft Inc.

According to Kumar, Oracle CEO Larry Ellison should never have declared shortly after announcing the buyout that it didnt intend to continue long-term support and development of the PeopleSoft products if the acquisition was successful. That comment "was just a non-starter" as a way to initiate a buyout, he said, because it ensured there was absolutely no basis for amicable talks between the two companies.

Ellison should have at least called PeopleSoft President and CEO Craig Conway the day Oracle notified PeopleSoft by letter that it was initiating a takeover bid, Kumar suggested.

Kumar said he viewed the Oracles unfriendly takeover bid in a negative light because if it goes it goes through it might start a trend in which "unfriendly deals are acceptable" in the computer industry. While unfriendly deals are common in most other industries they remain the exception in the computer industry, Kumar noted.

The U.S. Justice Department last week filed suit to block Oracle buyout attempt on the grounds that it is anti-competitive and violates federal anti-trust law. Oracle officials said the company will go to court to try to block the injunction.

Through the 1980s and 90s CA was a frequent player in the mergers and acquisitions market either buying once successful companies that were declining or small companies that provided technologies that allowed CA to expand its product line.

The buying stopped when Kumar became CEO in 2000 just as the Internet boom and stock market bubble burst. Since then CA has been retrenching. But he said that future acquisitions were possible "if they were big enough and strategic enough."

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John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...