CA responds to allegations about its accounting practices
Computer Associates International Inc. is holding a Webcast Monday morning to
respond to a New York Times article Sunday that reported the software company
used accounting practices to make it appear as if it were booking more new licensing
revenue than it in fact was.
Companies have a fairly wide degree of discretion over how they book software
revenue: either as maintenance -- ongoing fees for software users have already
paid a license for -- or as licenses, for new software contracts. The New York
Times, citing various sources -- some unnamed -- reported that the company booked
as license revenue what would typically be considered revenue from maintenance
contracts. In this way the company made it appear as if it were selling more
new licenses than in fact it was, the article reported. The problem with this
practice is that it masks how much new business CA is winning, according to
the article, potentially skewing how observers analyze the company's future
prospects.
"It has become apparent to us ... that it is incumbent upon us ... to
have a full and fair disclosure regarding the facts surrounding our business,
our business model and the future of our business," said Sanjay Kumar,
CA chief executive officer, at the start of Monday's Webcast. CA characterized
the gist of the article as "erroneous."
Another issue the article reported is that CA includes at no extra charge licenses
for its flagship Unicenter system management product in what would typically
be considered maintenance contracts. It then books the maintenance revenue as
new license Unicenter revenue, whether or not the users actually make use of
the Unicenter software, the article said. Therefore fewer users may be using
the company's flagship product -- which the company often touts as key to the
future of its business -- than the accounting practice may lead observers to
think, according to the article.
CA said two weeks ago that its fourth-quarter results will top analyst expectations,
with revenue rising 3.6 percent over the year-ago period and operating earnings
per share topping forecasts. CA attributed the strong forecast to the company's
recently introduced subscription-focused business model, which Kumar is set
to explain in Monday's Webcast.
Neither the CA press release announcing the Webcast, nor Kumar at the start
of the Webcast, mentioned the New York Times article specifically.
The Webcast can be seen at http://ca.com/apr30call/
ITworld.com
Symantec Backup Exec 12 and Backup Exec System Recovery 8 deliver industry leading Windows data protection and system recovery. Download this whitepaper to find out the top reasons to upgrade and how to get continuous data protection and complete system recovery.
Data and system loss — from a hard drive failure, malicious attack, natural disaster, or simple human error — can happen anytime. Don’t leave your business vulnerable. Make sure you have a secure recovery strategy in place. Symantec's latest backup and system recovery technology can efficiently restore critical applications, individual emails and documents and even restore your entire system in minutes in the event of a loss.
Businesses face a growing challenge to ensure that the IT environment is properly protected. Backup Exec 12 integrates with other applications in the Symantec family of products, to complement your current data protection strategy, keep your data securely backed up and make it recoverable when you need it most.
