Computer Associates: Scandal? What Scandal?

By Baselinemag  |  Posted 2004-07-01 Print this article Print

In the last two years, Computer Associates has been tarred over accounting improprieties relating to how it booked software sales, requiring the company to restate earnings going back to 1999.

In the last two years, Computer Associates has been tarred over accounting improprieties relating to how it booked software sales, requiring the company to restate earnings going back to 1999. And last month, the company officially lost its head: Former CEO Sanjay Kumar, who had already been demoted to "chief software architect," quit the company in the wake of the scandal.

To many customers, though, these events are a sideshow—as long as the company keeps delivering the goods. "Sure, we've kept our fingers on the pulse of the situation and done our homework to stay informed. But we have seen no degradation in services," says Linda Reino, CIO of Universal Health Services, a hospital management company that uses CA's Unicenter to monitor its network and applications.

In fact, the financial turmoil may have humbled CA and given it a greater incentive to improve products. The company once had a bad rap for acquiring technologies and poorly melding them together. These days, the integration among the tools in the broader Unicenter suite is noticeably better, says Steve Hernandes, director of enterprise management at credit-card transaction processor First Data. "They used to have silos of development, but in the past two years they've done a lot to address that," he says. One big change: Unicenter Version 3.0 provides a common way of communicating across all of the applications in the suite.

CA has also delivered more stable products, the result of more rigorous beta-testing processes, says Christine Swist, systems integration engineer at health insurance provider UICI. "We were always hesitant to move to the latest version of Unicenter," she says. "But the last versions have been great."

All the while, CA's pricing—once notoriously high—has come down. Six years ago, defense contractor EFW paid $150,000 annually in maintenance fees to CA; that's now $132,000 per year even as its servers have roughly tripled to 42, says Harry K. Butler III, manager of the firm's data center.

Aside from Unicenter's "little quirks," such as the need to customize the generic reports CA provides, Butler says he has no complaints. "If there's a problem, they get the appropriate resources together," he says. "CA can't point the finger at CA when something goes wrong."

Application Performance Management

Computer Associates

1 Computer Associates Plaza

Islandia, NY 11749

(631) 342-6000


Ticker: CA (NYSE)

Employees: 16,000

Wai Wong

Senior VP & General Manager, Unicenter Solutions

Joined the company in 1988 and worked on the first version of Unicenter. Previously, he was responsible for CA's services and education unit.

Vince Re

Senior VP, Unicenter Network and Systems Management

The 20-year company veteran now heads the business unit that produces one of the central pieces of the CA enterprise management suite. Most recently, he was senior vice president of development and chief architect.


Unicenter Network and Systems Management tracks performance and availability of applications, operating systems and infrastructure devices, and provides alerts based on user-set thresholds. Unicenter Application Performance Monitor measures application response times by emulating user activity.

Reference Checks


Harry K. Butler III

Solutions Center Manager


Project: Defense contractor checks response times of 42 servers with Unicenter Application Performance Monitor.

Delaware Dept. of Education

Bob Czeizinger

Information Resource Manager


Project: Uses Unicenter to ensure 95 servers are available, including its Web-based pupil-attendance and student-identification systems for 180 schools.

Peel Regional Police

Mike Stevenson

Enterprise Administrator

(905) 453-3311

Project: Ontario law-enforcement agency picked Unicenter to monitor 54 Hewlett-Packard and IBM servers because of its "hardware- neutral" legacy.

First Data

Steve Hernandes

Dir., Enterprise Management


Project: Financial-transaction services firm tracks 5,000 servers in four data centers with Unicenter tools.

College of the Holy Cross

Jay W. Levitan

Technical Services Engineer


Project: College in Worcester, Mass., tracks 85 NetWare, Windows, Linux and Solaris servers with Unicenter; it picked CA because of its superior support for NetWare.


Christine Swist

Systems Integration Engineer

(817) 255-3236

Project: Health insurance company centralized application and system monitoring with Unicenter in 2001; previously, three staffers would manually check critical applications every hour.

Executives listed here are all users of Computer Associates' products. Their willingness to talk has been confirmed by Baseline.

Other Financials**

Total assets - $10.68B

Stockholders' equity - $4.72B

Cash and equivalents‡ - $1.90B

Long-term debt - $2.30B

Shares outstanding - 589M

Market value as of 6/25 - $15.57B

** As of March 31, 2004, except as noted

‡ Includes short-term investments

Computer Associates operating results*

Revenue -$3.28B$3.03B$2.89B
Gross margin -93.3%92.2%90.2%
Operating loss --$54M-$368M-$1.38B
Net profit/loss -$25M -$267M-$1.10B
Net margin -0.8%-8.8%-38.2%
Earnings per share -$0.04-$0.46-$1.91
R&D expenditure -$662M$644M$656M

* Fiscal year ends March 31

Source: company reports


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