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CA--it can buy, but can it innovate?

On the conference call announcing Computer Associates' purchase of Concord Communications, the first question was about the cost ($330 million plus $20 million in debt). Why, a financial analyst asked, was CA paying a 70 percent premium over Concord's stock price, particularly given that Concord just said it will miss its first-quarter numbers?

The answer, although straight-forward, reveals a lot about the "new CA" and the management team running the show.

With the acquisition, CA can fill out its Unicenter line with network management tools. It also gains significant number of people with networking skills, particularly in the telecommunications market where Hewlett Packard's OpenView is strong. (Aprisma, which Concord had acquired, was the former Spectrum management software group of now-broken-up Cabletron.)

In other words, it was a technology and people-driven acquisition, which sometimes can be pricey. Turn back the clock five or ten years and a CA acquisition usually meant the purchased products were going into cruise control. CA was happy to keep collecting on the acquired companies' maintenance contracts but how much did it really invest in those products?

Also notable is CA's speed in pulling out its check book. It acquired another Massachusetts company, Netegrity, last October, which is now being completed. The company says to expect more, particularly in its "core" areas of systems management and security.

But CA can't count on growth by acquisitions as it once did. To compete for the top spot in its market, it needs both size and cutting-edge technology. That means doing the hard work of integrating acquired companies as well as investing in internal engineering.

"We can be an innovative company," CEO John Swainson said in an interview in February.

CA has cleaned house following its huge accounting scandal . Swainson has reorganized the company to be more focused and he's shown willingness to be aggressive in the marketplace.

Now, as it absorbs these acquisitions, we'll find out how much the new CA differs from the old.