Strip away the finger-pointing and the proxy fight for control of Computer Associates International Inc comes down to this: which side has the best plan for selling business software? At issue when investors vote Aug. 29 on rival slates of directors is whether the company should be split into four parts, as Texas billionaire Sam Wyly wants, or whether it should continue under current management as an all-in-one giant integrating 1,000 products.
Under his takeover plan, Wyly envisions a burst of innovation from independent units working more closely with customers. Each would be run by a chief executive, perhaps named from within the company.
Computer Associates, on the other hand, says its recently revised business strategy will help clients integrate a broad range of tools to solve complex problems. Company officials say recent changes in their system -- moving to shorter-term licenses and marketing products under four main brands -- are starting to pay off.
"Sam Wyly's reckless proposals to break up CA simply do not make sense," President and Chief Executive Sanjay Kumar said in a statement accompanying a proxy filing this month.
Wyly announced an attempt to oust the current board and management on June 21, accusing company officials of mistreating customers and using accounting tricks. The company has fought back, attacking Wyly's plan as costly and suing Wyly for what it says are false statements.
The company's largest shareholder, Swiss billionaire Walter Haefner, who owns about 21 percent of Computer Associates stock, has signaled his support for management. Other investors have largely remained silent. Though some financial analysts endorse Wyly's complaints about poor returns for shareholders, they aren't yet embracing his prescription for change.
"The proxy group has made good points regarding CA's stock performance and relationships with customers, but it is old news," CIBC World Markets Inc. analyst Melissa Eisenstat, who has a "buy" rating on the shares, wrote to clients last month.
In her view, Wyly will fail, and the company's new strategy ``will ultimately be positive for the company.'' For years, the Islandia, New York-based company focused on selling software for mainframe computers, behemoths that process banking transactions and stock trades.
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