John Swainson, an IBM vet, will be expected to restore credibility to
embattled company, analysts say
BY MARK HARRINGTON
STAFF WRITER
November 23, 2004
Computer Associates International Inc. is expected today to name John
Swainson, a 26-year veteran of IBM, its chief executive following a winter
transition period, sources said.
Swainson, 50, who just last July was promoted to general manager of sales
for International Business Machine's software division, has a long history
at Big Blue, the world's second largest software company after Microsoft.
Swainson was chief architect for several of Armonk-based IBM's most
ambitious and successful software endeavors, including the industry-standard
WebSphere.
Previously, he was general manager of IBM's Application and Integration
Middleware group, vice president of IBM Application Development Solutions
and director of the IBM Toronto Laboratory. A native of Canada, Swainson, a
father of three, has an engineering degree from the University of British
Columbia.
The move, first reported on Newsday.com yesterday, marks the highest-level
appointment of an outsider at Islandia-based CA, a company long known for
its insular, ground-up culture.
Michael Dortch, principal analyst at the Westport, Conn.- based Robert
Frances Group, said Swainson is likely to bring a new level of structure to
bare- knuckled CA.
"You can almost assume anybody with bonifides that include IBM is well
versed in how to run a well-structured, button-down organization," Dortch
said.
The company has shown progress in recent months that Swainson must be
careful not to upset, he said. "His challenge will be to excise whatever
needs to be gotten rid of without blunting the momentum of the positive
changes already under way," Dortch said.
But others noted that after acknowledging $2.2 billion in accounting
improprieties, purging top management and agreeing to a $225-million
deferred prosecution settlement with federal prosecutors, CA required a big
lift. Although the chief executive post has been occupied on an interim
basis by Kenneth Cron, Swainson replaces Sanjay Kumar, who was indicted on
federal charges of securities fraud and obstruction of justice in September.
Kumar has pleaded not guilty.
"What they need now is credibility," Laura DiDio, an analyst at Boston-based
Yankee Group, told Bloomberg News. "When you have the ex-CEO under
indictment, who are you going to call? You want one of these IBM guys; it's
like having Eisenhower as president again."
CA spokeswoman Shannon Lapierre declined to comment. An IBM spokesman,
acknowledging he'd heard rumors of Swainson's departure, said, "We don't
comment on rumors."
Investment banker Gary Lutin, who runs a forum for CA investors, said he
expects Swainson's appointment "will be viewed by shareholders as a positive
step toward establishing a viable company."
Shares of CA approached their 52-week high yesterday, rising 25 cents to
close at $30.11.
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