CA unhappy with its storage business

CA looks to turn around sluggish third-quarter sales growth in its storage management business

While software vendor CA is pretty happy with the financial performance of three-quarters of its business, its storage management operations are not up to par, according to executives.

CA sees storage management as one of the company's four main business pillars, the other three being enterprise systems management, security, and business services optimization. All four form part of CA's Enterprise IT Management (EITM), the vendor's road map to both simplify and more tightly integrate all of its software products.

CA is "not satisfied" with sales growth in its storage management business, John Swainson, the company's president and CEO, said Thursday during a conference call to discuss the vendor's third-quarter results for fiscal 2007. In particular, he blamed CA's indirect sales channel which the company is already taking steps to revise and rebuild, after bringing in new management last year.

Swainson, who's very much a glass half-full kind of a guy, said he's optimistic that CA's storage business will turn around, perhaps before the close of fiscal 2007. He pointed to a string of purchases designed to fill in the spaces in CA's storage offerings, the most recent of which was the July purchase of continuous data protection technology vendor XOsoft.

CA's not the only one struggling with its storage business. Rival Symantec recently announced poor third-quarter fiscal results in that sector of its business which it acquired through the 2005 purchase of Veritas.

As in previous financial quarters, CA's overall focus remains realignment of its sales force around the world, cost reduction and implementing new business processes, Swainson said.

Nancy Cooper, chief financial officer at CA, gave an update on the vendor's implementation of SAP's enterprise applications which it sees as crucial in its ongoing transformation.

CA went live with SAP's financial applications in April in the U.S. and at the end of October it got the U.S. services operation deployed on the ERP (enterprise resource planning) software. The process was "difficult both from the process and systems point of view," she said. Given the complexity of the implementation, that experience wasn't surprising, Cooper added.

CA plans to roll out SAP's applications to the rest of its global operation in 2008. "We'll go step by step on this thing," she said.

CA's troubled past continues to bubble up to the surface. Two more former executives were recently sentenced in federal court in Brooklyn, New York, for their roles in a massive securities fraud which took place at the company several years ago. The fraud involved the false reporting of hundreds of millions of dollars in revenue before licensing agreements were finalized to bolster quarterly financial results.

Earlier this week, U.S. District Court Judge I. Leo Glasser sentenced David Kaplan, CA's former senior vice president of finance and administration, to six months of home detention. Last week, the same judge sentenced Ira Zar, CA's former CFO, to seven months in prison and seven months of home detention.

In November, Judge Glasser sentenced CA's former CEO Sanjay Kumar to 12 years in prison and a $8 million fine, while codefendant Stephen Richards, the ex-head of worldwide sales at CA, later received a seven-year jail term.

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