CA names new CEO; enterprises feel little impact

ISLANDIA, N.Y. - Computer Associates' reshuffling of upper management last week and its decision to spin off some businesses may play well on Wall Street, but observers say the moves probably won't mean much to enterprise network customers in the short run.

CA, which has seen its stock plunge nearly 50% since the company warned in early July that its first-quarter earnings would be well below expectations, announced that its founder, Charles Wang, would step down as CEO. Taking his place is Sanjay Kumar, who has been CA's chief operating officer and president.

Wang will remain as chairman of the board and develop new, unspecified business ventures.

The company says it remains committed to its enterprise product lines for storage, security, and network and systems management, as well as its application development and business intelligence wares. But it plans to sell some of its noncore businesses, such as AccPac, a desktop accounting and management software product. CA will also spin off a company, dubbed iCan-ASP, devoted to help application service providers run their businesses.

Last week's reorganization is the second announced by CA this year. In the spring, the company said it would split its salesforce in two, one part focused on OS/390-based products and the other on e-business software. However, that earlier move has failed to help CA's bottom line or revenue. The company blamed its disappointing first-quarter results partly on a big slowdown in OS/390-related software sales as customers await the next generation of IBM mainframes.

Those who are already sold on CA's current regime should have no problem with Kumar's ascension to head the firm.

"There is absolutely no concern on our part," says Allan Horn, vice president of technology at USAGroup, a financial services company in Fishers, Ind., that uses CA's products. "We've worked with Sanjay a lot, and we have all the confidence now that we did prior to the announcement. We're still getting the services we contracted for."

Some observers say while this management reshuffle probably won't hurt CA's enterprise product lines, it's not necessarily going to address areas the firm needs to focus on. What CA really needs to do is better integrate its security and management products to let IS staff get more useful information about a company's Web transactions and other business operations, says John McConnell, principal at McConnell Associates, a Boulder, Colo., consultancy.

More radical changes will be on the way if the company doesn't show stronger earnings and revenue this quarter, speculates Patrick Dryden, an analyst at Illuminata, a Nashua, N.H., consultancy.

What would benefit IS managers most would be if CA spun off some of its more promising technologies and sold them as individual products, rather than bundle them into massive, expensive packages. He says CA's recent spinoff of the Neugents ii e-business neural network technology from the Jasmine ii middleware offering is a case in point.