Kumar Continues to Defend Accounting Practices
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A Computer Associates International sales executive Monday touted the company's channel-preferred sales model for storage products and chided competitors for pulling away from channel sales.
"We will be successful in this marketplace utilizing partners as opposed to utilizing a direct model. That is exactly the counter of what is going on in every other storage business today," said Stephen Richards, executive vice president of sales at CA, Islandia, N.Y., during a quarterly meeting with financial analysts in New York.
"Veritas, Legato, ... everybody is moving away from a channel model and to an inside sales model, or to a direct-sales model, and they're moving that way specifically for one reason: profitability," Richards said.
Companies move to direct sales when they believe they have a saturated marketplace and think they can boost profits by cutting out solution providers' profit margins, he said.
CA launched a channel-preferred sales model around its BrightStor storage products at CA World in April and pledged to implement the model across other product lines if the strategy proves to be successful.
Richards also outlined CA's plan to grow its demand generation organization, also introduced at CA World, to 700 people over the next two to three years, up from 250 today.
"This is going to be an incredibly critical piece of our strategy on a going-forward basis," Richards said.
CA President and CEO Sanjay Kumar said the economic environment remains challenging. Customers are spending, but not at levels that indicate an economic recovery is at hand, Kumar said.
"Customers are not forward-buying capacity, and we don't expect them to in the near future," Kumar said, noting that the economic environment " is not any worse than it was two to three months ago."
Kumar also said CA continues to cooperate with a federal investigation into its accounting practices and again asserted the company has done nothing wrong.
The company has not been subpoenaed but has voluntarily provided information for the investigation, which launched in February as a preliminary inquiry by the Securities and Exchange Commission and the U.S. Attorney's Office, Kumar said.
CA revealed in May that the SEC has issued subpoenas to third parties.
"To suggest that there was somehow a change in the company's revenue recognition policies around the 1995 time frame is absolutely false, and I think it will be proven that way," Kumar said, responding to a news report last month that said the investigation is focused on whether CA deliberately overstated financial results to inflate its stock price through fiscal 1998 and 1999 in order to qualify senior executives for a $1.1 billion stock compensation package.
"We remain confident that our accounting was proper and we are focused on running the business today. That's our No. 1 priority," Kumar said.