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The Wall Street Journal  

November 23, 2004

Computer Associates
Names New CEO

November 23, 2004; Page A6

Computer Associates International Inc. turned to the ranks of a giant rival for its next chief executive, selecting John Swainson, a 26-year veteran of International Business MachinesCorp.

Mr. Swainson, 50 years old, was the developer of WebSphere, IBM's collection of middleware, or software that links disparate systems together. He ran the WebSphere group from 1997 until July 2004, when he was promoted to head IBM's world-wide software sales group. He resigned Friday. A spokesman for IBM declined to comment.

Mr. Swainson will be the first outsider, other than its acting caretaker CEO, to occupy the corner office at Computer Associates, a software maker long associated with Charles Wang, who started the company in 1976 and passed the torch to his protégé, Sanjay Kumar, in 2000.


Mr. Kumar has been charged with criminal securities fraud and was forced out of the company earlier this year in an accounting scandal that also stripped away much of his top management. He has pleaded not guilty to the charges.

Chairman Lewis Ranieri said Computer Associates considered nearly 30 candidates for the job. People familiar with the matter said others considered were high-level IBM executives Steven Mills and Michael Daniels, as well as several General Electric Co. officials. Leo Apotheker, head of world-wide operations for software maker SAP AG, was also a finalist but withdrew after a report in newspaper Newsday named him as a preferred candidate, a person familiar with the matter said. CA said in a statement at the time that Mr. Apotheker "is not a candidate."

Having avoided a corporate indictment for the company's accounting woes, board members and current executives say they are confident Computer Associates is finally on firm footing, and the appointment of a permanent chief is among the last steps needed to shuffle off the old regime. An announcement of Mr. Swainson's selection is expected today.

CA is one of the world's largest software makers and primarily sells programs that run on the back-office systems of large corporations. In recent months, the company has pushed to expand sales to small- and medium-size businesses, and has dipped its toes in the waters of the consumer market.

Expanding sales beyond giant companies, broadening Computer Associates' geographic reach and reordering a sprawling software catalog will be among Mr. Swainson's first challenges. Finding new ways to sell the company's products is a "necessity," Mr. Swainson said in an interview. Still, he added, "We're not going to lose our focus on our core customers ... our enterprise customers."


 CA Posts Loss After Big Charge1
 Former CA CEO Kumar Is Indicted2
 Computer Associates Strikes Deal With Government3
 CA's Kumar Quits as Chairman, CEO4

Computer Associates had been without a permanent chief since April, when its board stripped Mr. Kumar of his titles of chairman and CEO. His fate had been sealed a few weeks earlier, when the company's former chief financial officer, Ira Zar, pleaded guilty to criminal charges of securities fraud and obstruction and implicated two people -- not identified at the time, but later revealed to be Mr. Kumar and an associate. Five former executives have pleaded guilty in the federal probe.

In the interim, the reins had been handed over to board member Kenneth Cron, one of a handful of directors with experience as a technology executive. Mr. Swainson will join the company immediately as president and CEO-elect, reporting to Mr. Cron in a sort of apprenticeship before he ascends to the CEO post sometime in the next several months.

Mr. Cron has a contract as interim chief that runs through March 31. Mr. Ranieri said Mr. Cron would remain a board member for some time afterward; Mr. Swainson has been elected to the board, though Mr. Ranieri will retain his chairmanship.

Nitsan Hargil, an analyst at Friedman, Billings, Ramsey & Co., says the board was wise to pick an outsider, particularly one with deep software experience.

Mr. Swainson's record running WebSphere -- a highly successful line at IBM -- was particularly appealing. "Within three years of launch [WebSphere] took over the dominant market position in the middleware space," said John Thompson, a vice chairman of recruiters Heidrick & Struggles International Inc., which handled the search.

---- William M. Bulkeley contributed to this article.

Write to Charles Forelle at charles.forelle@wsj.com5 and Joann S. Lublin at joann.lublin@wsj.com6

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