Update: CA to acquire Wily for $375 million cash

"It's magical, almost mystical when great product, incredible talent and an impressive customer list align," Barrenechea said, describing the Wily deal. CA has a retention plan in place to try to keep all the Wily staff. "We'll do our darnest to let great talent flourish," he added.

Privately held Wily will contribute about $72 million in revenue in CA's 2007 fiscal year. While CA generally aims to make its acquisitions pay off profitably within a year, it expects the Wily deal to take three years to return its cost, CA Chief Operating Officer Jeff Clarke said. Wily is not currently turning a profit; the company moved into the black a year ago, but decided to sacrifice profitability to further invest in development and expansion, according to Wily executives.

Wily's products are used by about 450 enterprises and government organizations around the world, CA said. Wily customers include DaimlerChrysler, Starwood, British Airways, Honda Motor, Cingular, Barclays Bank and others across 30 to 35 countries, according to Mike Malloy, Wily Technology senior vice president of marketing.

The deal will reduce CA's earnings per share in fiscal 2006 and have no impact on EPS in 2007, it said.

Wily was not for sale or in play, Malloy said. The acquisition arose out of a personal relationship between Wily's Williams and Swainson, he said, with the companies beginning a series of discussions a couple of months ago. "The more we talked, the more compelling the combination became," Malloy said. "Our values are very much in alignment and the fit of the products is just great. "

Wily has "very long-standing and deep relationships" with all the major application platform players, including IBM, BEA Systems, Sun, Oracle, and SAP, according to Malloy. "Those relationships will very much continue as we go forward [with CA]," he said.

Being part of CA will help Wily accelerate its product development, increase the support services it can offer its customers and open doors to more potential users with CA's sales force numbering 2,500 people to Wily's 30, Malloy said.

CA's currently on an acquisition roll with Barrenechea estimating that the company has spent upwards of $1.6 billion on purchases including Aprisma, Concord, iLumin, Netegrity, and Niku. All the purchases have enabled CA to beef up its presence in its four core markets -- security, storage, BSO and ESM. CA will continue to look for more acquisitions, with the company in a position currently to "do an acquisition per quarter," he said.

CA's acquisitions have been savvy ones, but the company needs to show that it has the management skills to make them pay off, IDC's Elliot said.

"[CA's] sales team has multiple tools to use. The big question is, can they get the growth numbers they need for Wall Street?" he said. "They've built their foundation. Now they have to build the house."

(James Niccolai in Paris contributed to this report.)