Is CA Inc Really Back From the Brink?

Apr.30.07 | About: CA Inc. (CA)

I didn’t attend CA (NASDAQ:CA) World in Las Vegas last week. But I did digest information from a bevy of sources. I hear CA Inc. CEO John Swainson set the tone for an upbeat but relatively low-key event. For CA, that’s a welcome change from the repeated scandals, executive changes and customer showdowns the company used to face. Here are five reasons to believe CA really is a transformed company--and three reasons to remain concerned about the CA’s future.

Five Reasons to Believe:

  1. Quiet But Effective Leadership: Swainson has spent more than two years cleaning up an accounting mess left behind by former CEO Sanjay Kumar. Swainson’s tenure hasn’t been perfect but he has avoided the lightning-rod status of former HP CEO Carly Fiorina and ousted Home Depot CEO Robert Nardelli. CA needed a quiet leader who focuses on customers rather than headlines. So far, Swainson fits that description.
  2. Improved Executive Retention: A year ago, CA’s chief financial officer, chief technology officer and chief operating officer left the company within weeks of each another. Swainson allegedly told the remaining executive team to either step up or step out. Turnover within CA’s executive ranks seems to have quieted down in the past year.
  3. Focus on Partners: The company used CA World to announce an aggressive plan to target mid-size customers. The strategy hinges on CA’s vast network of technology partners and integrators.
  4. Still Drawing A Crowd: More than 6,000 partners and customers attended CA World. Few software companies can attract such a large crowd.
  5. Standing Up to Charles Wang: Was former CEO Sanjay Kumar the master behind CA’s accounting scandal—or was he merely an apprentice to company co-founder Charles Wang? I'm not qualified to answer that question. But after investigating the situation, CA’s board now points a finger of blame at Wang. The move effectively distances CA from its sometimes controversial co-founder.

And Three Reasons to Worry:

  1. Managed Services: In recent weeks, everyone from IBM to Symantec has announced managed services for small businesses. CA’s big small and midsize business push didn’t really mention managed services or Software as a Service (SaaS). Big mistake. CA’s backup and security products have to be revamped for managed services.
  2. Rusty Brands: Mention “CA Unicenter” to customers and many of them think of a big, complex, expensive software platform. It's time for CA to follow Oracle’s lead (Oracle Financials, Oracle Manufacturing, etc.) and simplify the naming of its brands.
  3. Silent Partners: Big partners like IBM, Microsoft and Sun lined up to sponsor CA World. But few companies other than CA actually made announcements at the show.

Clearly, CA's leadership continues to show its commitment to corporate compliance. And the company's stock is trading near a 52-week high. That's a strong indication Swainson has finally gotten CA back in the game. Next up, CA CTO Al Nugent will need to devise a company-wide software-as-a-service (SaaS strategy.