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Associated Press
Computer Associates Taps IBM's Swainson
Monday November 22, 11:33 pm ET
By Ellen Simon, AP Business Writer

Report: Troubled Software Company Computer Associates Has Tapped IBM Exec Swainson As New CEO

 

NEW YORK (AP) -- Troubled business software company Computer Associates International Inc. reportedly has selected longtime IBM executive John Swainson as its new chief executive.

Swainson, an executive at rival International Business Machines Corp., where he has worked for 26 years, will replace interim CEO Kenneth Cron, Newsday and The Wall Street Journal reported Monday.

"We currently have no comment for you on the CEO search," said Computer Associates spokeswoman Shannon Lapierre. "We will (get) back to you when we have additional information to share."

A spokesman for IBM also refused to comment. Messages on Swainson's home answering machine were not immediately returned.

Computer Associates' shares closed up on the news, rising 25 cents a share to $30.11. The shares fell 19 cents in late trading.

Swainson, 50, is a Canadian native whose most recent responsibility at IBM has been for worldwide software sales. He previously ran the company's software development and its Toronto lab and is credited with helping to create the software category known as "middleware," which sits between an operating system and an application, such as a spreadsheet.

He is an atypical executive in some respects: At a 2000 conference, he gave a speech quoting from gonzo journalist Hunter S. Thompson's motorcycle gang book, "Hell's Angels."

He has a hard job ahead of him at Computer Associates.

"What shareholders are looking for is probably the same thing employees, customers and the prosecutors are looking for: someone with the leadership to assure corporate integrity," said Gary Lutin, an investment banker who advises institutional investors on corporate control issues.

Cron has served in the top spot since former CEO Sanjay Kumar stepped down in April. Kumar was indicted in September for securities fraud and obstruction of justice; he has pleaded not guilty.

The software and storage company, based in Islandia, N.Y., has been beset by accounting woes that caused it to restate financial results from 2000 and 2001.

The Securities and Exchange Commission said the company "prematurely recognized" more than $1.4 billion in revenue during its 2000 fiscal year from at least 116 contracts that had not yet been signed. According to the indictment, Kumar once flew to Paris to close a contract that was falsely backdated.

Another top officer is under indictment and four others have pleaded guilty to similar charges.

Government regulators struck an unusual deal with the company in September that will defer prosecution of the company as a whole. The company agreed to make $225 million in payments to shareholders as part of the deal. An outside monitor will track its financial reporting for 18 months.

 


Copyright 2004 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.

 

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