CA to cut 5 percent of work force

The planned elimination of 800 jobs is part of a restructuring plan that will cost $40 million, the troubled firm says.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
Computer Associates International announced on Wednesday that it plans to cut 5 percent of its work force as part of a restructuring effort, a move that comes as the company seeks to rebuild itself after a long-running accounting scandal.

CA plans to cut about 800 positions as part of a plan to save $70 million annually. The enterprise software company has been struggling financially. In addition, its former chief executive, Sanjay Kumar, and its former head of global sales, Stephen Richards, were recently charged with securities fraud and obstruction of justice.

Additionally, CA last week announced a $225 million settlement with the U.S. Department of Justice over allegations that the company and its former executives engaged in accounting fraud.

"Now is the time for CA to move forward," Kenneth Cron, the company's chief executive, said in a statement. "CA has great strengths in its technology, its customer base and its balance sheet. To ensure our long-term success, we need to effectively leverage these strengths and realign our investments with the company's strategic growth opportunities."

Under the restructuring plan, CA will streamline its product lineup and cut positions throughout the organization.

The layoffs are expected to be completed by the end of October. The cost of the restructuring, including severance payments and related expenses, is anticipated to be $40 million, or 4 cents a share.

"This restructuring will have no effect on our ability to fulfill the obligations of the deferred prosecution agreement announced last week. There is nothing more important to us, and we are committed to fulfilling every requirement," Cron said.

Once the restructuring is complete, the changes will save $70 million annually, the company said.

CA previously admitted to back-dating contracts over a two-year period, as a means of meeting Wall Street's financial projections for the company. The software maker later conducted an internal audit and had to restate $2.2 billion in revenue for fiscal years 2000 and 2001. Several high-level executives were ousted.

Kumar and Richards have both pleaded not guilty in the case, but the company's former general counsel, Stephen Woghin, pleaded guilty to charges of securities fraud conspiracy and obstruction of justice.