As Wall Street and the tech industry continue to digest the surprising announcement of CA Inc., boss John Swainson’s impending retirement, the firm’s exiting CEO says his replacement will have to chart the once scandal-tainted company’s “growth phase”.
“While I have led the Company through the first phase and we have gotten on the right track, I think the Company deserves to have a new leader in place who will drive the Company in its growth phase,” Swainson said in a blog addressed to CA employees.
Late last week, CA announced that it had reached an agreement with Swainson that the CEO would retire effective December 31. Citing the company’s deep management and IT talent pool and recent growth, Swainson said: “We all agreed that the time for this transition could not be better.”
The IBM-veteran from British Columbia was brought in by CA in 2004 to salvage the company’s reputation following the fall of Sanjay Kumar, the CEO of then Computer Associations International Inc., who was indicted on charges of securities fraud conspiracy and obstruction of justice.
In 2006, Kumar and several Computer Associations International officials pleaded guilty to financial fraud charges. The company changed its name to CA Inc. and was forced to pay US$225 million to compensate victims.
Swainson, who was the first CEO hired from outside the company by CA, is largely credited for turning around firm.
But to CA employees, Swainson said it was time to part ways:
“So, why am I retiring now? If things are going this well, why not stick around and lead the team through the next phase? Simply put, it’s the right time for me and for CA.”
Swainson said he came to CA with a single purpose: To help get the company back on its feet.
“We are back. We have built a new CA. And having achieved what we set out to do, it is now time to look to the future,” said Swainson.
“Swainson was a very strong operational manager,” says Warren Shiau, senior associate and lead analyst at IT research firm The Strategic Counsel in Toronto.
When Swainson took over, Shiau said, the former IBM exec brought operational discipline to a company notorious for its “swashbuckling sales strategy.”
“CA under Kumar was very aggressive on in sales but not strong in operations. This was the time they got mired in accounting scandals,” the analyst said.
Swainson carried out a big sweep of management and brought in people he could trust to follow his agenda,” Shiau said.
Bill McCracken, interim executive chairman of CA, said that under Swainson’s direction the company achieved the following:
· CA built a leadership team of high quality, seasoned senior executives and a talented, dedicated employee base of more than 13,000;
· Executed on initiatives designed to improve and strengthen relationships with our more than 4,500 customers worldwide;
· Enhanced and repositioned its product portfolio through internal development and targeted acquisitions. Over the past five years CA has built its mainframe franchise, established leadership in the distributed space and positioned the Company to take advantage of growth opportunities presented by emerging technologies such as virtualization and cloud computing; and,
· Significantly improved management of the business, streamlining processes and implementing systems that make the CA of today more effective, efficient and able to quickly capitalize on opportunities in the marketplace.
“Any one of these undertakings could tie up a Company for years. John and his CA team kept focused, accomplishing all of this in a competitive market that will leave stragglers at the side of the road,” McCracken said.
During Swainson’s tenure operating margins improved 50 percent, while earnings per share almost doubled. CA also enjoys recent upgrades by all three rating agencies to investment grade, he added.
Shiau of Strategic Counsel said whoever is picked to takeover the reigns of CA will have a tough act to follow. “On one hand, CA back from the brink. But the next CEO can’t afford to lose the momentum and disappoint the board and shareholders.”
“As I looked at the road ahead, I could see that the next phase will be every bit as challenging as the one we have just come through,” he said in his blog.