RealTime IT News

Computer Associates Reorganizes

Computer Associates International Inc. Monday cleaned house in a grand scheme to reorganize its different business divisions.

Realigned Computer Associate executive's plan to initially focus on delivering greater shareholder value by spinning off technology that would thrive and flourish on an independent basis.

The first corporate sibling to form is iCan-ASP Inc., designed to service the application service provider infrastructure marketplace.

CA contends that the ASP market segment is large enough to support its direct attention and growing rapid enough to mandate a separate business focus from its core software lineup.

Nancy Li, CA chief technology officer was named chief executive officer for the fledgling business division.

iCan-ASP tentatively plans offer new and innovative technologies for providing applications through the Internet, over wireless and broadband communication networks.

CA has retained Credit Suisse First Boston and Morgan Stanley Dean Witter to advise on taking iCan-ASP public.

Additionally, CA announced that Sanjay Kumar, current president and chief operating officer will assume the helm as president and chief executive officer. Charles Wang, CA founder will exit the chief executive slot but will continue to serve as chairman.

Wang said the restructuring would better serve investors and clients alike.

"This realignment marks the logical transition from the founder phase of CA to the next level of corporate activity, which is more focused on enhancing shareholder value and is a broader implementation of our vision," Wang said.

If CA maintains its commitment to being a worldwide leader in e-business software it will also need to intensify its focus on its three fastest-growing product areas; security and storage management, network performance management, and application development for business intelligence.

Kumar said focusing on its fastest-growing businesses is part of CA's evolution in a dynamic marketplace.

"The announcement reflects our emphasis on driving CA to be more efficient and customer-focused, and to heighten awareness of CA's core strengths and innovations," Kumar said.

While CA seeks to balance strong revenues from its core businesses with increased value from new business ventures, analysts remain doubtful that CA's profit woes can be wiped clean by restructuring.

CA stock went tumbling when it issued a profit warning in the first quarter due to contract delays and weak European sales.

As chief operating officer, Kumar was left holding the bag, apologizing for CA's sharp earnings drop and calling the soft sales of software for S390 mainframe computers an absolute screw up.

To mitigate the problem, Kumar said the company would try to cease bundling within the same contract software for mainframe and distributed computer systems. That way, the software firm would no longer rely on hardware manufacturers to sell its services.

Still, analysts and investors were not convinced that CA's declaration of independence from hardware manufacturers would stop the stock slide and CA shares dipped to record lows.