By Katie Hoffmann

Sept. 2 (Bloomberg) -- CA Inc. fell the most in nine months in U.S. trading after saying that Chief Executive Officer John Swainson, who helped the software maker recover from a $2.2 billion accounting fraud, will retire by the end of the year.

The board has formed a committee to find a replacement, Islandia, New York-based CA said yesterday. Swainson, 55, took the reins in February 2005 after his predecessor was indicted for inflating sales.

Under Swainson’s leadership, CA’s revenue has grown in each fiscal year save its latest and has almost doubled its earnings per share. Now the second-largest maker of software for mainframe computers is facing a drop in technology spending amid the worst recession since at least the 1930s.

“It comes at an inopportune time,” Richard Sherman, an analyst at MKM Partners LLC, said in an interview today. “The company has kind of settled down as a very consistent performer. When you change that management team, people become concerned.”

Sherman, based in Greenwich, Connecticut, downgraded his rating on the stock to “neutral” from “buy.” He doesn’t own shares of the company.

CA reiterated its forecast yesterday for the year ending in March. In July, CA said per-share earnings would be at least $1.60, excluding some items. Swainson’s exit will lead to a 2- cent expense tied to severance this quarter, Chief Financial Officer Nancy Cooper said on a conference call.

CA fell $1.66, or 7.6 percent, to $20.20 at 4 p.m. New York time in Nasdaq Stock Market trading, the biggest decline since Dec. 1. The stock has climbed 9 percent this year.

Accounting Fraud

Swainson’s predecessor, Sanjay Kumar, stepped down in April 2004 for his role in the fraud. He began serving a 12-year prison sentence two years ago.

“Those were tough times,” Swainson said of the scandal in a blog posting to employees yesterday. “The management team had been decimated as a result of the investigations. The product strategy was confused, the development team was fragmented.”

Swainson joined CA in 2004 from larger rival International Business Machines Corp. As CEO, he revamped the sales unit to improve contracts tracking and financial reporting. He also cut more than 3,000 jobs and shifted some offices to countries with lower wages to reduce operating costs.

To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net