Kumar Out As Computer Associates' Chairman And CEO

Sanjay Kumar has stepped down as chairman and CEO of Computer Associates International.

The news was announced Wednesday as one result of an internal audit being performed by CA's board of directors into the company's accounting practices.

Kumar will stay on with Islandia, N.Y.-based CA as the company's chief software architect, a new position created for him. Kumar also resigned from the CA board, according to company officials.

"The board will launch a search for a new CEO immediately and is expected to name an interim CEO shortly," the company said in a statement.

Meanwhile, Lewis Ranieri, the CA board's lead independent director since 2002, was elected chairman of its board of directors."We believe the decisions we have made today are fair and responsive to the situation and in the best interests of CA's customers, shareholders and employees," Ranieri said in a statement. "The audit committee's and the entire board's exhaustive review of these matters resulted in the removal of a number of individuals from the company. The changes in Sanjay's role are not based on the conclusion that he engaged in any wrongdoing. Nonetheless, the conduct in question occurred during his tenure, and the board felt this action was appropriate."

CA is still under investigation by the U.S. Department of Justice and the U.S. Securities and Exchange Commission concerning charges related to the company's accounting practices. In addition, three former CA executives, including former CFO Ira Zar, recently entered guilty pleas as part of cooperative agreements with federal prosecutors.

Robert Nardoza, a spokesman for the U.S. Attorney's Office in New York, said the announcement by CA of internal changes was strictly a CA decision and would have no bearing on the ongoing federal investigation.

Steve Pazol, CEO of nPhase, a Chicago-based machine-to-machine technology company that still supports a CA Unicenter installed base, said he did not expect the news to have a lasting impact on CA's relationship with its partners.

"I think Sanjay stepped down for the good of the company," Pazol said. "Everyone's attention has been focused on this. The soap opera is going to go on for a while. But for channel partners this is not going to impact them."If you look at almost all companies, the pendulum swings sometimes with a heavy channel emphasis and other times with a direct emphasis," Pazol said. "It is back and forth. Right now with Unicenter, CA seems to be swinging back to the channel."

Valeh Nazemoff, director of business development at DataTech Enterprises, a Fredericksburg, Va.-based solution provider and CA partner, also said the management change should not impact CA's business.

"CA has made a lot of channel investments and continues to invest in the channel," Nazemoff said, noting that DataTech's CA sales are up 300 percent in the past year. "We strongly believe we can continue working together and grow our CA business."

"CA is definitely adding more value to the channel proposition," she said. "They are strategizing more with the partners. The CA culture has changed. The direct-sales team is now working with partners. That is a big change. Years ago we butted heads with the direct-sales force."

Nazemoff said she is glad Kumar has agreed to stay with the company as chief software architect."That is a good business decision," Nazemoff said. "Sanjay has a lot to offer. Strategically, he knows a lot about the business. I'm curious to see what his new role entails going forward."

On Monday, CA fired nine employees in its legal and finance departments as a result of issues raised during an independent investigation by the board of directors' audit committee into the company's accounting practices.