Computer Associates International's management shake-up is unlikely to affect customers directly or dramatically...
change the company's products plans and strategy, customers and analysts said yesterday.
By removing Sanjay Kumar as chairman and chief executive officer, CA defused mounting pressure to clear its executive ranks amid speculation of past accounting violations.
More than a dozen employees have been pushed out of CA in the past six months as the company tries to put behind it years of questions and investigations into book-keeping practices used before a November 2000 business model change.
In his three years as CEO Kumar expanded CA's management team and improved customer support, said analyst Michael Dortch of the Robert Frances Group, adding that those changes will help CA survive the transition period as it searches for a new leader.
"The biggest challenge facing CA right now is to reassure customers and partners," he said. "To the extent that CA is successful at this, most customers will continue to care little, if at all, about who's running what."
Paul Francis, senior manager of systems security for US grocery chain Shaw's Supermarkets, said he was sad to see Kumar go but did not expect any negative repercussions. Shaw's uses CA's eTrust security software.
"Things have been pretty smooth with CA in spite of what's happened," he said. "There's a good management team in place. I don't expect any disruption."
Kumar will remain with CA as its chief software architect, a move applauded by some.
"The good thing is that he's still with Computer Associates," said Javed Matin, CEO of consultancy Myriad Solutions, which deals exclusively with CA products.
"Hopefully, with the change, the perception of CA will improve. It's too early to say what impact it's going to have on business. We'll have to wait and see."
CA will soon name an interim CEO and is searching for a permanent replacement. Analysts expected the new CEO to come from outside the company.
"There is no clear number two," said analyst Gregg Moskowitz of Susquehanna Financial Group. "They have some serviceable executives who can step in for the time being."
CA and Kumar could still face further legal action: The US Securities and Exchange Commission warned CA in January it is considering civil penalties against the company, and court papers filed by the US Department of Justice show that it believes more executives at CA knew about the accounting violations than the four former employees charged so far.
Kumar is widely believed to be a target of the investigators' continuing inquires.
CA's product plans are unlikely to be affected by Kumar's shifted responsibilities. Each of CA's product portfolios is headed by a brand executive who oversees developments, and that team remains in place.
The company has also taken steps to replace executives forced out by the accounting scandal. Earlier this month it hired Jeff Clarke, the former head of global operations for Hewlett-Packard, as its chief financial officer.
That hire shows that CA can attract talented executives, Moskowitz said.
One customer who has had a rocky experience with CA said the management turmoil could not make things any worse. "We're never happy with their customer service," said Win Shih, head of automation for Saint Louis University's Pius Library. "If the company changes leadership, it could be good or bad. It depends on the new person."
Stacy Cowley writes for IDG News Service