Texan billionaire seeks to oust CA's board

Don't write him off

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Texas, the spiritual home of the cowboy, used to be known for big hat wearing, baked bean eating, bull riders. Nowadays though there's a new image coming out of this western state. The bulls are still there of course, but this time they don't come in Rodeos, this year they come in bullishness. And this year they aren't taking any prisoners.

In much the same way as Dubya Bush resolves situations by applying the death penalty, one of his supporters is calling for a very similar axe to fall on the heads of Computer Associates. His gripe is that CA just isn't innovating. His resolution is to install himself as the chairman.

Sam Wyly, a billionaire Texan, has this week launched a proxy bid to take over the helm of CA. If successful he is planning to split CA into four operating units and return investor value to the firm. He claims that, 'By any performance measure - stock price, financial growth or customer satisfaction - Computer Associates has clearly under performed against its peer companies.'

Wyly, if truth be told, could have something of a valid point. In many ways CA could look better by being restructured along its technology lines. And, you could argue, that CA's pro-forma invoicing, which has resulted in a bout of bad press recently, does make the firm somewhat unnacountable for a couple of years - because previous results will be incomparable to current results. You could also argue that he has some claim to the company, having sold Sterling Software to CA for $4 billion recently.

However, Wyly's campaign, you could argue, reeks of opportunism and personal politics - with adverts in the New York Times criticising CA's management team for smiling. Further to that, he looks to be milking a run of bad press that CA has suffered recently and is using this as grounds for his instatement as chairman.

CA, as you might imagine, is keeping pretty tight-lipped about the whole affair. It has said that it wholeheartedly disagrees with Wyly and that its stock has risen 72 per cent over the past six months.

Further to that, the firm has had the backing of one of its biggest shareholders, a Swiss investor called Walter Haefner who owns 21 per cent of the firm. He has written to Wyly stating that he is confident in the ability of CA's management team. Fidelity Investments, another major shareholder, is so far said to have kept quiet.

Wyly, in a typically bullish fashion, says that CA should allow all of its shareholders to vote on his proposal. But, presumably, CA's argument is why should they listen to Wyly? CA has consistently done exactly what is says it is going to do - in terms of revenues, growth and overall performance - and bad press doesn't mean that will change.

Further to that, CA's management team, which consists of founders Charles Wang and Sanjay Kumar amongst others, has already created one of the world most successful software companies. Wyly, on the other hand, hasn't.

But, you can't write him off. He is undoubtedly a successful entrepreneur and a force to be reckoned with. That doesn't mean that he is the man to return investor value to the company of course. But it does mean that, with the annual general meeting of shareholders approaching, CA could have an interesting battle on its hands.

© IT-Analysis.com. All Rights Reserved

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