CA to cut workforce by 5%

Computer Associates International plans to cut 800 positions worldwide, 5% of its workforce, in hopes of shaving $70m...

Computer Associates International plans to cut 800 positions worldwide, 5% of its workforce, in hopes of shaving $70m (£39m)annually off its operating costs.

The layoffs will be completed by the end of October, and will affect most departments. CA plans to make cuts in its development group aimed at "improving productivity and simplifying the product portfolio". Marketing efforts will also be trimmed, although the sales group will be only minimally affected, CA said.

CA spokeswoman Shannon Lapierre said no further details were available on how the cuts will affect CA's product portfolio or whether CA will revise its development road maps.

The changes are part of an effort CA began several months ago, she said, when it formed a "managed products group" to evaluate which legacy products should be put out to pasture, and how CA can best support customers still relying on those products.

"This is about making sure we're spending our dollars on the products that are going to be the most successful for our customers, and also for the company in terms of sales and profits," Lapierre said.

The unsurprising move comes less than a week after CA agreed to spend $225m on a restitution fund to compensate shareholders for losses suffered as a result of a fraudulent accounting scheme carried out at the company several years ago. The fund is part of the deal CA struck with the US Department of Justice and the US Securities and Exchange Commission to avoid prosecution for the accounting violations.

CA expects to spend $40m on the restructuring, with $25m of that incurred in the current quarter. At the end of its 2004 financial year, in March, CA had 15,300 employees, down from 16,000 a year earlier.

Smith Barney analyst Tom Berquist said the timing of the announcement likely means bad news on sales in CA's current quarter.

"The obvious thought is that CA has missed its quarter and therefore views this as an idea time to take a [restatement] charge. We believe this outcome is most likely."

Stacy Cowley writes for IDG News Service

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