In brief: Kumar calls it quits at CA

Plus: GAO report critcial of software patching; seven former Symbol executives arraigned on federal charges; Oracle and the DOJ head to court; and, India’s outsourcing business continues to grow despite protests.

Sanjay Kumar, Computer Associates’ chief software architect and former CEO, has left the company. Kumar already had stepped down as CA’s chairman and CEO in April, after questions about his role in an accounting fraud that saw CA record revenue before contracts were finalized to inflate quarterly financial results. The scheme took place during CA’s 2000 and 2001 fiscal years, and affected revenue of $2.2 billion. Investigations by the Securities and Exchange Commission and the Department of Justice into CA’s accounting practices continue, even after three former executives pleaded guilty in April to criminal charges related to improper accounting. “This could be seen as an indication that [Kumar] will be indicted; otherwise there was no apparent reason for him to leave,” says Richard Ptak, a partner with consultancy Ptak, Noel & Associates. “The immediate impact will be felt more in management and the financial markets than in the product side of things.”

The U.S. government’s General Accounting Office last week issued a report entitled “Continued Action Needed to Improve Software Patch Management” that concluded that 23 federal agencies and the Department of Homeland Security could be doing a lot better job in applying software patches. The GAO acknowledged the patch-update challenge is one federal agencies can’t solve on their own and the IT industry needs to do more to facilitate the process. The GAO is recommending the Office of Management and Budget provide guidance to agencies that would require them to report on their patch-management practices in their annual Federal Information Security Management Act reports. The GAO also wants to determine the feasibility of providing centralized patch management services to federal civilian agencies – even though one attempt by the government to do that, which was initiated by the Federal Computer Incident Response Center, was discontinued.

Seven former top executives at Symbol Technologies were arraigned last week on federal charges of “massive corporate fraud.” An indictment charged the former CEO, CFO and several former vice presidents with a variety of fraudulent practices that inflated the wireless LAN vendor’s earnings from 1999 to 2002 by more than $200 million. Five other former executives previously pleaded guilty to conspiracy charges arising out of the same investigation. No charges were filed against Symbol and its current management. But President and CEO William Nuti and Board Chairman Salvatore Iannuzzi signed agreements with the U.S. Attorney’s office and the SEC to pay $139 million to compensate shareholders for losses connected to the swindle. The ex-executives named in the indictment include Tomo Razmilovic, president and CEO, and Kenneth Jaeggi, CFO.

Oracle and the Department of Justice are heading to court this week to do battle over the software maker’s hostile takeover bid for PeopleSoft, a deal the government says would choke competition in the enterprise applications market and lead to higher prices for customers. Lawyers for the two sides are due to present opening arguments today in a federal court in San Francisco. Each side then gets two weeks to present its case. The trial is expected to last about a month, and government sources said they expect a verdict fairly quickly, perhaps as soon as August. If either side appeals, however, the drama could drag out until next year.

Despite protests in Europe and the U.S. against outsourcing and the moving of jobs to India, the country’s software services and business process outsourcing services business is booming, according to data released last week by the National Association of Software and Service Companies in Delhi. India’s software and services exports business recorded revenue of $12.5 billion in the year to March 31, up by 30.5% over revenue of $9.6 billion in the previous fiscal year, according to NASSCOM. The U.S. and U.K. markets accounted for about 85% of revenue.India’s software and services exports are projected to grow by about 32% in the year to March 31, 2005, to reach revenue of more than $16.3 billion, according to NASSCOM.