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The Wall Street Journal  

February 15, 2005 6:20 p.m. EST

Computer Associates Sees
Many Acquisition Targets

February 15, 2005 6:20 p.m.

BOSTON -- Computer Associates International Inc. is "always looking" for acquisition candidates in the security software and network management arenas, John Swainson, chief executive officer, said in an interview.

Speaking after giving a keynote address at the LinuxWorld show in Boston, Mr. Swainson said "we think it's an opportunity-rich environment." He declined to name any potential candidates.

Mr. Swainson said that in the enterprise security field "we're No. 2 with a 8% market share," behind International Business Machines Corp.  CA estimates that there are more than 800 security software firms in business, providing numerous takeover targets. 

CA, which used to be one of the most acquisitive companies in the software business, retreated from takeovers from 2001 to 2003 as it fended off investigations of what turned out to be a $2.2 billion accounting scandal.  Last year a number of top executives resigned, some under indictment, as CA struggled to resolve the issues.

In October, just weeks after resolving a criminal probe of its accounting, CA agreed to buy Netegrity Inc. in a deal that valued the security-software provider at $430 million.  Mr. Swainson indicated that CA continues to see opportunities.

Although he acknowledged that "everything in the industry is in play at some price," he said that "I'm not looking to sell CA. We have tremendous opportunity," he added.

He added that the work that remains for "getting our house back in order," might discourage some acquirers who would fear unknown risks. Moreover, with CA's  market cap of over $15 billion, "there are a limited number of companies that could acquire," CA.

Write to William M. Bulkeley at bill.bulkeley@wsj.com1

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