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Wang leaves CA, hands off to Kumar

Wang leaves CA, hands off to Kumar

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Computer Associates founder Charles B. Wang is retiring from his posts as chairman and member of the company's board of directors, handing the positions to CA president and CEO Sanjay Kumar.

Wang's retirement comes after over 25 years with the company and is effective immediately. He will, however, take the honorary position as chairman emeritus of the board, the company said.

Kumar, 40, joined CA in 1987 and has served as president and CEO of the New York software company since August 2000.

CA customers shouldn't expect any drastic change in product or corporate strategy as a result of Wang's departure because Wang, who founded CA with three associates in 1976, has been gradually transferring control of the company to Kumar in the past two years or so, said Paul Mason, IDC's vice president of infrastructure software research.

"I don't expect to see any significant change in strategy, because the strategy we've seen in recent years is Sanjay's strategy," Mason said.

Gartner analyst Betsy Burton also sees little change happening from Wang's exit. "I don't see any major shift or change for the organisation as a result of this retirement. He has been slowly moving out of the company for several years. Everyone in the market has been expecting this for some time," Burton said.

Mason said CA has held its own during the industry's tough times in the past two years. Now it needs to upgrade its flagship Unicenter systems management platform and would do well to branch out further into areas like portal technology, software development and data and application integration, Mason said.

Neither analyst sees, at least at first glance, a link between Wang's decision to retire and recent government inquiries into CA's operations. "I don't see an immediate connection, unless there's something the company is hiding that we don't know about," Mason said.

CA spokesman Dan Kaferle said Wang's decision to retire has nothing to do with inquiries into CA's operations. "It's not related whatsoever," he said.

Wang began transferring the day-to-day operations of the company to Kumar in August 2000, a process which culminated six months ago when Wang handed over responsibility for the Asia-Pacific region to Kumar, Kaferle said. "For the past six months, Wang's duties have been primarily board-related," he said.

CA has been cooperating since February with a joint investigation by the US Securities and Exchange Commission (SEC) and the US Department of Justice concerning some of the company's accounting practices, specifically CA's historical revenue recognition policies and practices, CA said in a May filing with the SEC. The Wall Street Journal reported later in May that the joint investigation centres on whether CA wrongly booked more than US$500 million in revenue in its 1998 and 1999 fiscal years in order to inflate its stock price and enrich top executives.

In September, an appeals court ruled that CA had to pay at least US$10.3 million to a group of shareholders because of violations committed during its 1991 acquisition of On-Line Software International. CA violated the "best price rule" in its buyout of On-Line by paying more for the stock of On-Line chairman and CEO Jack Berdy than it did for the stock of other shareholders, the court ruled.

Last year, CA faced an acrimonious proxy battle led by disgruntled investor and strident critic Sam Wyly, founder of Ranger Governance. Although Wyly failed in his goal to unseat CA's top executives, including Wang, from CA's board, the proxy battle turned into an ugly public relations nightmare for CA. The campaign also highlighted investors' uncertainties about Wang, since around three times as many shareholder votes were withheld for his board nomination as for any other candidate.

Wyly again this year launched a proxy battle vowing to unseat Wang and Kumar from the board but abandoned his campaign after reaching an agreement with CA.

CA makes a variety of software products, for areas such as systems management, security, integration and storage. In its second fiscal quarter, to September 30, CA had revenue of US$772 million, up from $733 million in 2001's second quarter, and a net loss of $52 million, smaller than last year's $291 million net loss.


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