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There was some disappointing news at software giant CA (formerly Computer Associates) last week as the company announced it was going through a restructuring and cutting about 1,000 jobs. That’s why a news report from Bloomberg was surprising.
Bloomberg noted that a number of big investors, including the likes of T. Rowe Price and State Street Corp. have boosted their stakes in the company. As one analyst noted, CA is getting “interesting” again, and its moves in recent months to get on the ground floor of the cloud computing market are winning favor.
So what exactly is going on at CA? Let’s deal with the layoffs and restructuring first. The company is basically pulling back from slower growing businesses and focusing on those activities “that support our corporate strategy and have the greatest impact on our performance, growth and customer loyalty,” Chief Executive Bill McCracken.
While McCracken didn’t reveal a lot of detail about which business lines would be pared back, he did clearly indicate where the company believes the future lies: cloud computing. In recent months the company has snapped up several companies that offer software to manage and monitor large cloud computing installations. It bought Nimsoft, a company that makes availability monitoring software for $350 million; 3Tera, a company that provides monitoring software for managing public and private clouds; and Oblicore, a company which provides software for managing service levels.
It’s a big gamble for CA, which is used to making its money largely in the legacy world of mainframe computers and one that McCracken appears to be architecting . McCracken was named CEO in January, following the announced retirement of John Swaison last September. McCracken has been on CA's board since 2005 and previously spent 36 years at IBM.
So far, investors appear to like McCracken’s strategy. Bloomberg noted that T. Rowe Price has snapped up about 7 million shares, according to regulatory filings, and State Street has added more than 1 million to its holdings. Over the last 12 months the company’s shares are up about 30%.
McCracken is expected to lay out his vision for CA at the company’s upcoming annual customer gathering, CA World, being held May 16-20 in Las Vegas. If there was any doubt that the company expects to use the event as a platform for change, check out the keynote speaker: James Cameron, the director of the 3D blockbuster Avatar. Watch for McCracken to tie Cameron’s revolutionary way of making films to CA’s plans to lay the foundations for a revolutionary way of doing business.
It does appear CA is getting interesting again.
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