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4/29/2004
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Clarke Says CA Is Ready To Move Forward

The software vendor's new chief operating officer says CA has eliminated the issues that triggered a government probe, and has a solid business model, balance sheet, and vision.

Less than a month after joining Computer Associates as CFO, Jeff Clarke's challenges have surpassed the assignment of setting the books straight to include directing the company's day-to-day operations as chief operating officer.

Clarke, the former CFO of Compaq, was named Monday to his new role by CA's board, which also chose board member and former CMP Media president Kenneth Cron as interim CEO. Also, Greg Corgan was appointed VP of worldwide sales, succeeding Stephen Richards, who resigned. Those moves came after the board last week reassigned former chairman and CEO Sanjay Kumar to the position of chief software architect. Board member Lewis Ranieri was named chairman.

At Compaq, Clarke help lead the integration of that company into Hewlett-Packard, and served as HP's executive VP global operations until accepting the CFO job at CA in early April. He says he didn't come to his new company with blinders on.

"Before I joined, I did substantial due diligence," Clarke told InformationWeek this week after being named to his new position. "I met with many members of the board and the management team and came away convinced that the company not only has an incredible product portfolio, but also a great vision and is very strong financially."

Clarke says it's important for customers and shareholders to understand that the company's internal investigation has been completed and that the probe has shown that financial guidelines implemented 2-1/2 years ago have been successful in eliminating the problems that led to the current probe by the Securities and Exchange Commission and Department of Justice.

"Clearly, the issues associated with the restatement and investigation hangs over the company," he says. "But we view the announcement of this week of successfully restating the financials as a cornerstone in closing a major chapter. The investigation concluded that the company's financial books, balance sheet, and income statement since the new business model was implemented is solid."

Going forward, CA will cooperate fully with the SEC and Justice Department and follow through with steps to improve financial controls, as well as putting a new management structure in place.

"There was wrongdoing, and we've taken action to remedy that," Clarke says. "All our constituents need to understand that the board of directors and management are fully committed to integrity, and the structural changes required to ensure that the revenue recognition problems of the past will never happen again are in place."

CA will be adding positions to its finance department, including a chief compliance officer and chief accounting officer, and will strengthen the positions of sales controller, marketing controller, and channel sales controller, says Clarke, who for the time being will also continue to serve as CFO.

CA's board will be looking for leadership and integrity in the permanent CEO, Clarke says, as well as an executive "who understands the place Computer Associates has in this industry." Until then, Cron "will provide a very steady hand as an outstanding executive and manager" and Kumar will continue to play an important role in developing the company's software, as well as a serving as a direct interface with customers and technical partners.

Customer surveys have shown that the company continues to have strong support for its products, despite the federal investigation. "The software products and the engineering staff have been effectively untouched by the investigation," Clarke says. "The same engineers are still there, and we have the same customer-facing people as in the past."

Clarke says the company will maintain its annual R&D expenses at about the same level as in the past, around $600 million, and it will continue to look for "small, strategic acquisitions."

"Customers and shareholders need to know that CA is a healthy company," he says. "CA is delivering nearly $1 billion a year in cash flow from operations and that allows us to invest in our sales force, marketing, and development."

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