Commentary: Proxy fight will improve CA

By Cameron Haight and Donna Scott, Gartner analysts

Despite Sam Wyly's loss in the proxy fight for Computer Associates International's board, Gartner believes that his intense focus on the company's governance and the press resulting from it will improve CA's attention to governance, shareholder concerns and communications.

	See news story: Wyly's big day at CA falls flat

In the end, as Gartner expected, the majority of shareholders voted to maintain the current slate of board members. This comes as a vote of confidence for CA's management team. Although the company's stock was pummeled in 2000, it has risen more than 75 percent since the beginning of January.

In June, when Wyly, along with his investment company Ranger Governance, announced that he would wage a proxy fight for control of CA's board of directors, he cited poor stock performance and abuse of customers and employees. Wyly employed a market research firm to survey CA customers and found a high degree of dissatisfaction, especially in pricing and customer support; few respondents cited functionality as a problem.

Gartner agrees and disagrees with some of the findings. It concurs with regard to customer dissatisfaction on pricing and support. In response to these concerns, CA in 2000 introduced a customer relationship organization (now comprising 600 people) and, later that year, more flexible "rental" pricing models. The new pricing models allow customers to acquire products independently of other products as needed, rather than being limited to bundled offerings. Gartner expects that CA's largest customers will see results from the customer support initiative by the end of this year and from the pricing initiative as contracts come up for renegotiation.

Gartner disagrees with Wyly's survey method--specifically in its comparison of CA to IBM and not to CA's traditional competition, which also did not fare well in the survey. Thus, one could interpret Wyly's report as depicting a lack of customer value for all the major competitors in this space. Moreover, although CA's shareholder value has fallen significantly since 1999, so did the value of other companies in the industry.

Before making any moves to replace products, dissatisfied CA customers should monitor the progress of the company's new customer support and pricing initiatives through the first half of 2002.

(For a related commentary on a recent partnership between CA and Intraware, see Gartner.com.)

Entire contents, Copyright © 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.