CA cutting 5 percent of workforce

Computer Associates International (CA) plans to cut 800 positions worldwide, 5 percent of its workforce, in hopes of shaving US$70 million annually off its operating costs.

The layoffs will be completed by the end of October, and will affect most departments, CA said in a written statement. CA plans to make cuts in its development group aimed at "improving productivity and simplifying the product portfolio." Marketing efforts will also be trimmed, although the sales group will be only minimally affected, CA said.

CA spokeswoman Shannon Lapierre said no further details were available on how the cuts will affect CA's product portfolio or whether CA will revise its development road maps. She cast the changes as part of an effort CA began several months ago, when it formed a "managed products group" to evaluate which legacy products should be put out to pasture, and how CA can best support customers still relying on those products.

"This is about making sure we're spending our dollars on the products that are going to be the most successful for our customers, and also for the company in terms of sales and profits," Lapierre said.

The unsurprising move comes less than a week after CA agreed to spend US$225 million on a restitution fund to compensate shareholders for losses suffered as a result of a fraudulent accounting scheme carried out at the company several years ago. The fund is part of the deal CA struck with the U.S. Department of Justice and the U.S. Securities and Exchange Commission to avoid prosecution for the accounting violations.

Islandia, New York-based CA expects to spend US$40 million on the restructuring, with US$25 million of that incurred in the current quarter, which ends Thursday. At the end of its 2004 fiscal year, in March, CA had 15,300 employees, down from 16,000 a year earlier.

Smith Barney analyst Tom Berquist said the timing of the announcement likely means bad news on sales in CA's current quarter.

"CA closes its books for the quarter tomorrow, and we are unsure how to 'read the tea leaves' at this point," he wrote Wednesday in a research note. "The obvious thought is that CA has missed its quarter and therefore views this as an idea time to take a (restatement) charge. We believe this outcome is most likely."

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