CA Pressure Mounts

Company banks on enhancements, reorg, outreach campaign

For Computer Associates International Inc., its not supposed to be like this. As the summer unfolds, one of the worlds largest software companies is trying to restore the robust financial results of yesteryear while plagued by a nasty proxy fight and a moribund economy. Even the companys annual user fest was a low-energy affair compared with previous years. Last week, the company entertained 10,000 users, according to CA estimates, compared with 25,000 in New Orleans last year.

It all started last July, when CA reported an exceptionally weak first quarter. Its response was a corporate restructuring, a customer outreach campaign and the appointment of veterans Sanjay Kumar and Yogesh Gupta to the roles of CEO and chief technology officer, respectively.

There was some indication that the moves were taking hold when the companys stock began staging a gradual rally this year after having dropped from $75 to $18 per share last year. But it wasnt enough for dissident shareholder Sam Wyly, who, with his organization, Ranger Governance Ltd., launched a proxy battle to oust CAs top management and take over the company.

In an interview with eWeek last week here at the companys CA World, Kumar said his company is doing the right things. The challenge, he said, is to make that clear to its shareholders.

"We have to rely on our record of performance over the last 15 to 20 years or more—and he [Wyly] has to rely on his," Kumar said. "So our job is to communicate our message to as many shareholders as possible."

Chairman Charles Wang voiced similar comments. "We will stand on our track record," Wang said in an interview. "We feel that we are the right stewards. We are headed in the right direction."

Kumar said the companys six-unit reorganization, undertaken last year, will bring benefits but must be tied to efforts to raise brand awareness among customers and investors. "I do believe that our [corporate] umbrella focus, the six pillars, the branding strategy will permit us to be viewed as leaders in these categories," he said.

The most critical technologies for the company are enterprise management, security and storage management, Kumar said. Though the technologies are nothing new for CA, each were enhanced at the user conference.

In enterprise management, CA sought to alleviate user complaints regarding cost and complexity by carving up its Unicenter suite into 30 modular applications that can be used in whole or in part. Among the new modules is Version 3.0 of Unicenter Network & System Management. At the same time, CA did away with the much-disliked power units pricing structure, replacing it with tiered pricing.

Its an effort to give customers what CA says theyve been asking for, and one customer was receptive. "Ive not been a CA fan. But Im very impressed with what theyve done with Unicenter and how theyre working with customers like us to develop the technology. Its a much more collaborative atmosphere," said Terry Milholland, CIO and chief technology officer at outsourcing company Electronic Data Systems Corp., in Plano, Texas.

In security, CA announced the eTrust Internet Access Solution Set, which is intended to authenticate Web users and let IT managers control their access to business applications and data.

In storage management, the company combined ARCserv, its departmental storage management product, and Alexandria, its Unix backup management product, under the brand name BrightStor. In addition, plans for storage virtualization, storage area network products and a storage management portal are also in the works, they said.

"I think its a very good move for them. They have a god-awful number of storage products acquired over the years," said Jasmine Noel, a Hurwitz Group Inc. analyst in Framingham, Mass.

But perhaps more important than a new product lineup is keeping customers happy, which CA has been doing, according to users.

"I have seen more responsive behavior going back six months or so. I would not want to see that interrupted. ... Breaking the company up would be counterproductive," said Robert Currie, senior project leader of Information Handling Services Group Inc., of Englewood, Colo., an electronic publishing company for the oil industry and a user of the CA IDMS database.