CA Cuts 800 Jobs; Recommits To Channel

CA also said it will trim parts of its extensive enterprise-software product line, but interim chief executive Kenneth Cron pledges to add new offerings in emerging technologies such as security software. More important for CA's partners, Cron says the company will move to strengthen its commitment to the SMB market and to indirect sales via the channel.

The latter tactic may be a natural outgrowth of the cuts, which will hit CA's marketing staff hardest. "This is an area we feel we can do things more efficiently," said Jeff Clarke, CA's COO. CA's television ads may also go, Clarke told a press conference this morning.

CA's 4,000-strong engineering organization is also targeted for personnel cutbacks under the restructuring plan, as the company looks to offshore more of its development efforts to India.

Some 550 of the 800 layoffs announced today will come in North America, where employees will receive their pink slips by the end of October. Overseas cuts will likely occur later in the year. Long-term, the downsizing is expected to yield about $70 million in annual savings.

That will go part way toward softening the hit CA took last week, when the company agreed to pay out $225 million to compensate shareholders for losses caused by an accounting fraud scandal. Former CEO Sanjay Kumar and former head of worldwide sales Stephen Richards were both indicted on charges of securities fraud and obstruction of justice for their alleged participation in that scheme.

Much as it did last week, CA positioned today's announcement as part of a strategy to confront its problems head on and move the company forward. Clarke said that, despite unspecified planned cuts to its product portfolio, CA plans to "redouble its efforts in product development." He points out that CA is spending $650 annually in research and development.

CA gave the VAR community some hints as to where it will focus those product efforts. "Investment in security is important for us," Clarke said. "The market is still growing there."

Cron also gave a big nod toward the company's Unicenter Enterprise Management brand. "Looking at our portfolio, we see opportunity across Enterprise Information Management, and [will] build our enterprise suite in that area," Cron told the press conference.

On the sales side, Cron appears intent on touching all the bases. "Jeff [Clarke] and I talk a lot about the SMB market," Cron says. "The channel market is important for us." Cron specifically told today's press conference he plans to increase CA's channel presence, but also plans to grow its direct sales force.

"The services area is one that we want to strengthen and grow," Cron added. "You can anticipate us driving the services area and improving it over the next quarter and year."

Whether Cron will be the person to do that over the long term remains unclear. When Cron, who was formerly president of publisher at VARBusiness' owner, CMP Media, signed on to run CA, his position was framed as an interim assignment. Last week, CA chairman Lewis Ranieri indicated that Cron was now a strong candidate to fill the CEO slot on a full-time basis. However, during today's press conference, company officials said that no decision was imminent.