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Tuesday, August 15, 2006

Computer Business CA Decides to Eliminate 1,700 Jobs

Computer business software maker CA recently announced it was going to eliminate 10.5 percent of its workforce, or 1,700 jobs due to a significantly decreased first quarter net income that did not match up to increasing expenses.

Computer business CA has had some accounting issues in the past, accompanied by many years of financial losses and also key personnel losses. The cuts are just one part of a restructuring of the company that will cost $200 million in the next two quarters.

The computer business is headquartered in Islandia, New York and spokespeople are confident that closing some of the offices and restructuring others will help bring about $200 million in savings per year once it is complete in 2008.

CA’s net income decreased to $35 million from $97 million last year, while revenue was $956 million up from $927 million. Experts expect that the net income will be just 3 cents per share on revenue of $931 million this year.

CA CEO John Swainson is helping with the new initiative to turn the computer business around. The company got rid of its top sales executive early in the summer and started rebuilding a sales force when it found that former accounting practices were not working. Scandals, including former CEO Sanjay Kumar’s accounting fraud charges based on a $2.2 billion dollar problem further rocked the company’s infrastructure and standing.

CA is responsible for selling software to help companies manage networks including mainframe computers, PCs and wireless devices. Other rivals in the computer business software industry, such as IBM and Compuware Corp. have been thriving, motivating the company further to do a complete overhaul.

Blogged By: Computer Consulting 101 Professional Kit