CA's Bad Week

Posted by Amy Larsen DeCarlo, Apr 26, 2006 09:48 AM

In recent months, CA has made great efforts to put the company's very troubled past behind it and move forward with a new chief executive and a new vision. The company went so far as to abandon its old Computer Associates moniker in hopes, I am guessing, of also shedding its tarnished image with the name. CA's moves were welcomed by its customers, industry observers, and by partners - who often described having a strained relationship with the systems management software giant.

Unfortunately, even as the company makes some pretty impressive strides on the product development and marketing fronts, putting the past behind it is a particular challenge in a week like this. Yesterday, Sanjay Kumar, the company's former CEO pled guilty to securities fraud and obstruction of justice related to an ongoing probe of a $2.2 billion scheme to make the company appear more profitable then it was. Kumar's plea comes just days after the arrest of another former CA executive, Thomas Bennett, who was charged with conspiring to obstruct justice. Bennett has pled not guilty.

None of this is really new news. Rumors swirled around Computer Associates for years about accounting fraud and Kumar, along with former Vice President Of Worldwide Sales Stephen Richards, were originally charged in 2004 with securities fraud in a plot to inflate earnings by using an accounting system that incorporated 35-day months and backdated contracts. But this still is an unsettling reminder of CA's very difficult past, and how sometimes rumors are reality.

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