CA accused of misstating sales

NYT details alleged campaign to boost new product

By John Leyden • Get more from this author

Posted in Business, 30th April 2001 11:50 GMT

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Computer Associates (CA) has been accused of misstating its sales results over many years in order to boost its financial results and market position.

The accusations, contained in an article in the New York Times, have been denied by the enterprise software firm, which is holding a press conference today in order to defend its position.

The paper quotes anonymous executives at CA who said it had inflated the reported sales of newly introduced products to create the impression that they were selling well. It said CA booked fees from software contracts as license fees immediately despite the fact money would only come in over a period of years.

According to the New York Times, if CA had used generally accepted accounting practices its sales for the quarter ending March 31 would have fallen by 60 per cent to $732 million, instead of the increase from $1.21 billion to $1.34 billion the firm reported.

CA said its pro forma pro rata results have been adjusted so that results of sales under a licensing scheme it introduced in October can be compared with its previous financial results. Under CA's new business model, which it describes as providing more conservative revenue recognition, it sells a subscription for its software and accounts for sales over the life of this contract. ®