With two days under his belt as the new
president and chief executive elect of Computer Associates, John Swainson
yesterday showed himself to be versed in the new and the old ways of his
adopted company. He said he'll build on the strengths, address lingering
weaknesses and keep CA's fundamental software development efforts local.
Swainson, whose appointment to the new posts was announced yesterday, will
report to interim CEO Kenneth Cron through a transition period of up to six
months.
In a conference call with Wall Street analysts and an interview, Swainson,
50, said he plans to get the most from CA's 5,000 software developers, while
continuing an effort to scour the field for new acquisitions. Cron said
Swainson will take over executive development and marketing teams
immediately.
Swenson, a 26-year IBM veteran, indicated he has no intention of moving CA
from its Long Island base, or farming big projects overseas.
"We have a great team that lives here and we're not going anyplace," he said
of Long Island. He expects to spend around half his time in Islandia, he
said, commuting from Connecticut, where one of his three children still
attends school. Beyond that, he said, "I'm going to figure out where I
personally live."
Recent moves by CA to quickly staff a development center in India, he said,
are under review. CA in October telegraphed plans to build a development
staff of 1,000 in India before year's end from a previous 400.
"We have no intention of moving our development resources off shore,"
Swainson said. "…We're not moving the company to India. We've kind of frozen
it at this point to make sure how well it's working."
Swainson said he plans to capitalize on CA's lead in the security and
systems management software markets, and work to correct past problems with
customers.
"There's a legacy here of difficult customer relations," he told analysts.
"I'm going to be working to improve relationships with customers ... turning
customers back into partners rather than adversaries."
On Wall Street, where CA shares gained 5 cents yesterday to close at $30.16,
analysts applauded his hiring.
"We believe Mr. Swainson will make a great addition," Nitsan Hargil, an
analyst at Friedman Billings Ramsey, wrote to investors. He cited Swainson's
"deep knowledge of the software industry" and the fact that he's "an
outsider." But some were puzzled by the transition, which one observer
called "unusual."
Investment banker Gary Lutin said the arrangement appeared more a "political
solution" than a practical one. "That's something you do in the senate, not
at a company," he said. "Most authorities on management succession advocate
giving a new CEO a clear position of command." CA chairman Lewis Ranieri
called it a conventional practice.
Swainson said he'd continue with the open, collaborative environment
installed by Cron, saying it's a management style he's comfortable with. But
few expect Swainson to be a pushover. In 2000, after rival BEA Systems
released a statement saying it owned the middleware market, Swainson fired
back.
"BEA is not to be believed on any of this stuff," he was quoted in
ComputerWorld Canada as saying. "Frankly, [then-BEA CEO] Bill Coleman is a
liar, Bill Coleman does not say anything that is truthful about the
marketplace and I would be happy to have you quote me on that."
In his new role, Swainson said acquistions and internal software development
will both be key to his strategy, although he suggested acquisitions could
take precedence. "My bias will be to look for early ways of entry into a
market," he said. CA chairman Lewis Ranieri said Swainson has joined CA's
board, bringing members to 10, and added that CA expects to appoint two more
outside directors soon.
CA, which purged more than a dozen executives and staffers following federal
probes of its accounting, continues to search for a permanent chief
financial officer, a position chief operating officer, Jeff Clarke, has
filled on an interim basis since April.
Swainson said he doesn't anticipate changes to CA's business model and
subscription accounting, noting, "Frankly I like what I've seen so far, but
I'm a day into the job ... I believe at some point all software companies
will move to a model that looks like this."
Swainson joins CA as the company embarks on an 18-month deferred prosecution
agreement with federal prosecutors after the company acknowledged $2.2
billion in past accounting improprieties.
While the deferred prosecution agreement isn't an optimal situation, he
said, "We will live with it and abide by the letter of it. Eighteen months
will pass and we won't have it anymore."
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