Original URL: http://www.theregister.co.uk/2005/11/15/ca_acquisition_strategy/

CA eyes service management purchase

No names now, but wallet on standby

By John Leyden

Posted in Software, 15th November 2005 09:59 GMT

CA World CA is on the prowl for acquisitions to round out its technologies in its four key business groups: systems management, security, storage and business service optimisation. But it is waving goodbye to the buying spree that characterised the company throughout the nineties.

Reviewing the competitive landscape this week at CA World conference in Las Vegas, the company acknowledged its products are behind some competitors in some features in the four key markets it plays in.

CA conceded that BMC is ahead in the service management sub-segment of the business service optimisation market while Mercury Interactive is ahead of the game in apps management. CA naturally rated itself well ahead of competitors in (its heartland) mainframe software and systems management markets while admitting Symantec/Veritas is top dog in data availability.

That suggests that business service optimisation purchases will be key to the firm's acquisition plans. CA, naturally enough, isn't saying who it intends to buy, but chief operating officer Jeff Clarke did explain its acquisition criteria. Acquired firms must be best of breed, meet CA's goal for long term growth and have projected returns on investment in excess of 13 per cent (ahead of its cost of capital).

"Of 20 firms we've looked at over the last 18 months we've only pursued eight acquisitions because the others did not fit our criteria," he said.

In the last year, CA has splashed out $1.2bn on four major acquisitions - security firm Netegrity, storage company iLimin, and services management outfit Niku and networking management firm Concord Communications - as well as a string of smaller purchases.

Former Niku chief exec Josh Pickus said senior CA execs were able to reassure its user base that support and development will improve as a result of the company's acquisition.

"CA has a history of certain acquisitions not being positive for users, and customers were concerned, but we've been able to show users Niku's technology will get adequate resources. Joining with CA gets us over the objection that users don't want to buy technology from another small vendor," he said.

Clarke told The Register that the new CA is going out of its way to distance itself from the aggressive sales tactics commonplace under its previous regime. "There been a drop in the percentage of customers who view us as antagonistic. We've done a lot of hard work meeting customers and unwinding contracts that they weren't happy with. This has created short term financial challenges but is right in the longer term," he said.

Last week, CA announced plans to sell a majority stake of its Ingres open-source database unit. Private equity firm Garnett & Helfrich Capital is financing the deal, which will see it become the majority shareholder in Ingres Corp. CA will retain a minority stake in the new business and a seat on its board.

In response to questions about the many products CA owns outside its four key strategic market segments, chief financial officer Bob Davis said it had no plans to sell off anything else of any consequence. ®