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CA chief candid about fall-out from scandal
By Maija Pesola in London
Published: April 18 2005 18:24 | Last updated: April 18 2005 18:24
John Swainson, the new chief executive of Computer Associates, believes it could take up to four years for the enterprise software company to regain its reputation following its recent accounting and fraud scandal.

“CA didn't get a bad reputation by just a series of things that happened in the late 90s and the early part of 2000. In any case there is a decade of history to unravel with customers,” he said. “We have a long slog ahead of us.”

Operationally and structurally, however, a turnround should be quicker about 18 months, Mr Swainson says, and investors should expect to see more acquisitions by the company before the year is out.

In November Mr Swainson, previously at IBM, replaced Sanjay Kumar who had been ousted as CA chief executive last April amid allegations of accounting malpractice and fraud.

More than a dozen executives have been fired in the past two years, since an investigation began following the discovery that $2.2bn had been booked too early in 2000 and 2001.

Since February, however, Mr Swainson has been meeting customers and staff to signal the beginning of a new era.

CA has until the end of 2006 to implement changes required as part of the settlement of its fraud case with the US Department of Justice. They include stronger financial and accounting systems, changes in senior management and new independent directors. CA is undergoing a structural overhaul, turning itself from a broadly based enterprise software company into a security and systems management specialist.

It has made acquisitions to bolster its position in this market. Last year it bought Netegrity and Pest Patrol, two security software companies, and earlier this month, it announced the $330m acquisition of Concord Communications, a network software company.

Mr Swainson expects to make a further acquisition this year, and to continue to make acquisitions at the rate of around two a year in the future. CA has been divided into five divisions: storage, systems management, security, business service optimisation, and a fifth division which takes in all the operations that do not fit in with the new security and systems management focus.

Mr Swainson says he does not want to dispose of this fifth division: it contains operations, such as mainframe database applications, which are still a key part of some customer relationships and make the company good profits.

© Copyright The Financial Times Ltd 2005.


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