CA Promises More of The Same, Only Better

This time, at least CA  didn’t have to postpone its earnings
call.

The management software and services vendor, which has struggled with a raft
of executive
defections, earnings
restatements and criminal
charges levied against senior managers, announced that profits fell 64
percent during the first quarter of fiscal 2007.

The company also announced that it was
reorganizing its operations and slashing 1,700 jobs, or 11 percent of its
workforce.

Despite the grim news, management said the beleaguered $3.8 billion computer
company is now on the right track.

During a conference call with analysts, CEO John Swainson admitted that the
company has performed poorly.

“We hit some potholes over the course of the last couple of quarters. I’m
not sure those should be completely unexpected in a transformation as big as
the one CA has been going through,” he said.

Swainson said changes to the management team, a new ERP system and a
well-planned acquisition strategy have positioned it for future growth.

“It’s now a question of execution,” he said.

Swainson argued that the company has a stronger product portfolio thanks to
a spending spree totaling some $1.5 billion, including acquisitions of iLumen,
MDY,
and XOsoft.

“We believe we’re years ahead of our competitors in building an integrated
set of products and solution offerings for enterprise IT management,” said
Swainson.

The Islandia, N.Y., company still has a huge task ahead, however.

CA has to integrate those
acquisitions into a coherent product portfolio and communicate that to its
customer base.

That base is perhaps its greatest asset. But analysts agree that the company
isn’t taking full advantage of that strength.

Arun Taneja, founder and consulting analyst at the Taneja Group, told
internetnews.com that CA doesn’t participate in enough industry
events or communicate in other ways.

“You know how often CA comes up when you’re talking to an IT person? It does
not come up as often as you would expect.”

Taneja was speaking of CA’s position in the storage area, but he might as
well have been speaking of the company as a whole.

Steve Duplessie, founder and senior analyst with the Enterprise Strategy
Group, said that CA has great products that fit together well, but hasn’t
communicated the message effectively.

“The reality is this cool stuff is not reaching the CA mass customer from a
messaging perspective,” he said.

IDC analyst Stephen Elliot noted that CA needs to do a better job
of engaging its customers on a strategic basis, and not just simply as a
provider of tactical solutions.

“CA has the opportunity to get to that level,” he said.

According to Duplessie, CA also needs to do a better job of listening to its
customers.

He said the company was late in adding certain functions, such as data
replication and back-up, and is still lagging in others, like document
management.

Meanwhile, IBM  and EMC  have been actively strengthening their product
portfolios, respectively acquiring FileNet
and Documentum.

But all agreed that CA’s huge customer base means that it cannot be written off.

“They have the hardest thing there is to get,” noted Duplessie, “and that is
a zillion customers.”

Charles King, principal analyst with Pund-IT Research, agreed that CA should
be able to stabilize its position and then grow beyond its installed base.

But, he said, “they have to get the word out that they’re still relevant.”