CA Issues 800 Pink Slips

CA executives said the layoffs were a way to streamline the Islandia, N.Y.-based company into a more efficient operation.

The cost-cutting measures come on the heels of a $225 million settlement with federal prosecutors in a case that charged CA with improper accounting practices.

"Now is the time for CA to move forward," said interim CEO Ken Cron, in a statement. Cron added that the layoffs "will have no effect on our ability to fulfill the obligations of the deferred prosecution agreement announced last week. There is nothing more important to us, and we are committed to fulfilling every requirement."

The terminations, which account for 5 percent of the company's employees, will affect almost every department in the company. Most of the layoffs should be finalized by the end of October, CA executives said.

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A simplification of CA's product portfolio is expected to take place alongside the layoffs, but CA executives did not elaborate on the details of product changes.

Severance pay and other entitlements to terminated employees will cost CA an estimated $40 million. Company executives said approximately $25 million of the total should be incurred in the second quarter of fiscal 2005, with the remaining amount expected to be incurred by the end of the fiscal year.

"CA has great strengths in its technology, its customer base and its balance sheet. To ensure our long-term success, we need to effectively leverage these strengths and realign our investments with the company's strategic growth opportunities. It is our goal to seize these strategic growth opportunities to ensure we deliver the highest returns to shareholders," Cron said.