Computer Associates: Scandal? What Scandal?By Baselinemag | Posted 2004-07-01 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 sideshowas 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 pricingonce notoriously highhas 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
1 Computer Associates Plaza
Islandia, NY 11749
Ticker: CA (NYSE)
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.
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.
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
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
Project: Ontario law-enforcement agency picked Unicenter to monitor 54 Hewlett-Packard and IBM servers because of its "hardware- neutral" legacy.
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.
Systems Integration Engineer
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.
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*
|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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