Sun, May 12, 2002 - Page 10 News List

Fidelity reduces its stake in Computer Associates


Fidelity Investments slashed its stake in software maker Computer Associates International Inc by almost half.

Fidelity, the biggest US mutual fund group, held 37.8 million shares, or 6.5 percent of the world's fifth-largest software maker as of April 30, according to a Securities and Exchange Commission filing. Boston-based Fidelity held 67.4 million shares, or 12 percent, on Dec. 31, according to Bloomberg data.

Computer Associates is the focus of an inquiry into what the Wall Street Journal has reported is the way it books revenue. The Islandia, New York-based company is also facing renewed demands for the removal of top management from Sam Wyly, who waged an unsuccessful proxy fight last year to gain seats on the company's board.

"They see something there that they not only don't like, but they don't think has a near-term prognosis that would enable them to hold [the stock] through a three-to-six-month time period," said Jim Lowell, editor of the Fidelity Investor newsletter.

"Fidelity was a very strong backer of management during the proxy battle."

Overall, Computer Associates was Fidelity's 40th-largest holding at yearend. As of March 31, it was the third biggest holding of Fidelity Low-Priced Stock Fund.

Wyly associate Stephen Perkins has said Wyly is considering another proxy battle.

Robert Gordon, a Computer Associates spokesman, declined comment.

While Fidelity was cutting Computer Associates, the company was adding shares of Continental Airlines Inc. and Frontier Airlines Inc. Fidelity held 8.32 million shares, or 13 percent, of Continental's outstanding stock as of April 30, a filing said.

That's up from 156,040 shares, or 0.2 percent, as of Dec. 31, according to Bloomberg.

Fidelity owned 3.14 million shares, or 11 percent, of Frontier's outstanding stock as of April 30, a filing said. That's up from 434,800 shares, or 1.5 percent, as of Dec. 31, according to Bloomberg.

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