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The New York Times 
November 23, 2004

Software Firm to Name New Chief Executive



Computer Associates International is expected to announce today that its new chief executive will be John Swainson, an I.B.M. executive with strong technical and sales credentials but who is untested in leading a business the size of Computer Associates, which has 15,000 employees.

Mr. Swainson, 50, left I.B.M. about a week ago to prepare to take the top job at Computer Associates, the troubled software company, said a person with knowledge of Mr. Swainson's plans. Neither Computer Associates nor I.B.M., a rival, would comment last evening on the expected appointment of Mr. Swainson.

Mr. Swainson assumes control over a company that is emerging from an accounting scandal, barely sidestepped criminal indictment and whose long-time leaders have been forced out.

Now Mr. Swainson, according to industry analysts, must repair relations with customers and find new sources of growth for a company that primarily sells software that corporations use on old-line mainframe computers.

"The long-term challenge for Computer Associates will be to make the strategic shift so it can grow beyond the mainframe world," said Kevin Buttigieg, an analyst at A. G. Edwards.

Still, Mr. Swainson should have the opportunity to plan a long-term future for Computer Associates, which is based in Islandia, N.Y. The company settled federal charges of accounting fraud in September for misreporting $2.2 billion in revenues. Unlike other companies tainted by accounting scandals in recent years, such as Enron and WorldCom, Computer Associates is not facing bankruptcy. In the fiscal year ending next March, the company will report profits of roughly $500 million on sales of $3.5 billion, Mr. Buttigieg estimated.

Mr. Swainson brings to Computer Associates a reputation as a respected technologist, one who is adept at winning over customers. Mr. Swainson, who is Canadian, joined I.B.M. as a systems engineer in Toronto in 1978. Over the years, he rose to become the head of the company's research laboratory in Canada and later oversaw the development of software products.

In the late 1990's, Mr. Swainson was placed in charge of shifting I.B.M.'s strategic focus in software away from operating systems, where it trailed Microsoft and Sun Microsystems, and to a layer of "middleware," which rides above the operating system and relies on Internet technology standards. I.B.M.'s middleware offering, called WebSphere, competes directly with Microsoft's Internet-era software known as .Net.

Among software specialists, in press interviews and on Wall Street, Mr. Swainson has been a forceful and articulate advocate for the I.B.M. strategy, which has delivered solid growth and market share gains for the company's WebSphere products.

"In Computer Associates, nobody is going to snow him technically," said Frank Dzubeck, president of Communications Network Architects, a technology analysis firm in Washington. "Swainson is also very good with customers, and he will have to shore up relations with customers. There is a lot of dissatisfaction among corporate customers with Computer Associates."

Though his background is as a technologist, Mr. Swainson took naturally to courting customers, former colleagues say. A wine expert, he particularly enjoyed hosting wine tastings for customers, they recalled.

Yet Mr. Swainson must also prove himself as a chief executive. "You couldn't pick anyone more knowledgeable about software and software development," said John Patrick, a former I.B.M. executive who is president of Attitude L.L.C., a consulting firm. "The challenge will be on the business side."

Computer Associates, founded in 1976, was built on a steady stream of acquisitions engineered by its founder and long-time chief executive, Charles Wang. He passed the reins to his handpicked successor, Sanjay Kumar, in 2000. Mr. Kumar was forced out earlier this year amid the federal investigation into the company's accounting misdeeds. Mr. Kumar was indicted by a federal grand jury in September on charges of securities fraud and obstruction of justice.

A director, Kenneth D. Cron, took over temporarily as chief executive last spring. Mr. Swainson is expected to be named interim chief executive and president and to assume those titles permanently after a period of months working closely with Mr. Cron.

Copyright 2004 The New York Times Company



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