CA Slights Breakfast Club

Breakfast, postage stamps, and the NY Islanders were high on the agenda at the company's shareholder meeting

August 26, 2005

4 Min Read
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Computer Associates International Inc. (CA) (NYSE: CA), which is struggling to emerge from a period marred by financial scandals, job losses, and internal upheaval, provoked outrage at its annual shareholders' meeting by failing to lay on breakfast.

The company shifted this years meeting from its native Long Island to Manhattan, which proved to be an unpopular decision with some shareholders. But this was nothing compared to CA's decision to skimp on food. “I am hungry and I didn’t get anything and I demand some food!” shouted one peeved guest.

New CEO John Swainson, facing CA shareholders for the first time yesterday, was eventually forced to comply (more or less) with demands. “We will provide goodies in the future -- I apologize for that,” he said. “This was not to save money, I assure you.”

Swainson also came under fire regarding CA’s quarterly dividends. “We get dividends of maybe 6 cents a quarter,” said one irate 90-year-old. “You can’t even buy a third of a postage stamp for 6 cents!” Any hopes the nonagenarian had of going crazy in his local post office were dashed late yesterday, when CA announced a 4 cent dividend (see CA Declares Dividend).

In keeping with the meeting’s Long Island theme, execs were also grilled about a payment CA made to the New York Islanders ice hockey team. “You paid $360,000 to the New York Islanders and they did not even play,” wailed one woman, referring to the dispute that wrecked the previous hockey season. A CA exec, however, reassured her that the company did get its money back.Despite all the rumbling bellies at yesterday's meeting, CA shares crept up 9 cents (0.34 percent) to $26.33 today after CEO John Swainson attempted to reassure shareholders that the firm is back on track. The software giant's M&A tear, for example, looks set to run and run.

CA has been extremely busy on the M&A front over recent months, snapping up Niku Corp., Qurb Inc., Tiny Software Inc., Concord Communications Inc., and eTrust Cleanup. (See CA Completes Niku Acquisition,CA Quaffs Qurb,CA Gets Tiny, CA Grabs Concord, and CA Acquires eTrust Cleanup .)

Swainson promised more of the same, despite the recent opening of the firm’s own CA Labs for product development (see CA Names Swainson CEO and CA Labs Established ). “Clearly, we will look at strategic acquisitions,” he said. Although the exec did not name names, he added that these will be in areas such as systems management, storage, and security.

In response to a question from the floor, Swainson downplayed the suggestion that CA could itself be acquisition bait as the software market consolidates into fewer players. “I do not believe that the industry will structure itself into three or four mega players,” he insisted. The CEO added that, up to now, CA has not received any overtures from potential buyers, but, “if a situation like that arose we would have to consider the interests of the shareholders, first and foremost.”

Swainson was drafted into CA from IBM Corp. (NYSE: IBM)to drag the company out of a turbulent spell, marred by high-profile corporate scandals and a $225 million settlement with the U.S Securities and Exchange Commission (SEC) and Department of Justice. The firm has also announced massive restructuring plans (see CA's Mea Culpa, CA Cuts 800 Jobs, and CA Changes Shape).Against this backdrop, some CA users have been getting anxious about the level of support they receive from the company, an issue that was raised by shareholders at yesterday’s meeting (see CA Users Bewail Support). Even the new boy was forced to admit that CA needs to build stronger customer relationships. Swainson added that “this is something that I keep harping on to everyone in the company.”

Looking to the future, Swainson said all the company’s software offerings are in line for an imminent upgrade. “We have major refresh cycles going forward [for] all of our line of products." These will be out on the market between now and the end of the year, he added.

The CEO is also looking to boost CA’s revenues from international sales. “We’re too U.S.-centric,” he conceded, adding that the company will now be targeting areas such as Eastern Europe, parts of Asia, and the Middle East.

— James Rogers, Site Editor, Next-Gen Data Center Forum

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