Information Technology Reference
In-Depth Information
CA tried to develop personal computer packages such as security and antivirus
but decided to leave that line and stay focused on larger business applications sold
to corporations rather than to end users.
They had a large software development staff and created quite a few inventive
applications. In fact, CA holds more than 400 patents and has hundreds more
pending.
Over time, CA also grew by acquisition and acquired so many software com-
panies that the Department of Justice began to examine whether or not CA might
own so many in the same field as to perhaps constitute a potential monopoly. Some
of the companies CA acquired were well known, such as Applied Data Research
(ADR), Cullinet, Capex, Sterling Software, the Ask Group, and UCCEL. CA has
acquired nearly two dozen software companies.
CA was the focus of a number of government investigations on topics of insider
trading, executive compensation, and accounting methods. For various reasons,
CA had an unusually numerous set of lawsuits involving customers, competitors,
and the federal government. One of the lawsuits was between CA and another gi-
ant, Electronic Data Systems (EDS), in 1996.
Note
As disclosure, I was an expert witness in a customer lawsuit against
CA, but I retired before the litigation finally settled.
One of the government investigations was for using accounting practices that
inflated revenues by booking them before they had been paid. This case involved
the Securities and Exchange Commission (SEC) and the Department of Justice. It
resulted in a 2004 settlement under which CA paid $225 million to shareholders
and revised its accounting methods. This was a serious issue, and former CA exec-
utive Sanjay Kumar, the CEO and Chairman, received a 12-year prison sentence.
Eight other CA executives pleaded guilty to fraud charges.
One government concern was that in 1999, Charles Wang received the largest
corporate bonus ever issued by a public company in history during a time of busi-
ness slowdown. The stock options awarded in this bonus amounted to about $670
million, which is certainly a notable bonus.
In spite of intermittent legal problems, Computer Associates has grown fairly
steadily and is one of the largest pure software companies in the world. The hun-
dreds of CA patents and the large number of software engineers who perform re-
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