CA gets its man
Computer Associates has found a chief executive at long last after a seven-month man-hunt. John Swainson, a veteran middleware manager from IBM will step into the gap left by Sanjay Kumar, the previous chief, who was stripped of his role in April amid allegations of accounting malpractice and fraud.
Mr Swainson’s career at Big Blue stretches back to the 1970s, where the company’s software business focused on middleware (the bits between the operating system and the application), and where CA’s portfolio of products are now also mainly focused.
Mr Kumar’s predecessor was Charles Wang, CA’s founder, making Mr Swainson the first outsider to run the company.
The announcement comes just weeks after CA settled a two-year fraud investigation by the US Department of Justice by paying a $225m fine and agreeing to closer outside scrutiny of its accounting. Mr Kumar has since been charged with fraud along with two other former CA executives as the group works to recover $1bn of bonuses paid to senior managers.
Kenneth Cron, who has been interim chief executive since April, will remain in the chair during a four-to-six month transition period.
PSoft’s poison pill under pressure
As CA closed question marks over its future leadership, Oracle’s bid for softare rival, PeopleSoft continued to bubble away as it once again called on PeopleSoft to redeem its “poison pill” defence.
The renewed plea came after almost 61 per cent of PeopleSoft shareholders tendered their shares for Oracle’s $24 a share offer.
Oracle said in a letter to the PeopleSoft board that it was for the company to redeem the poison pill rather than for the courts to decide. But later in the week it also announced it was putting up a raft of nominees to challenge PeopleSoft’s existing board of directors at its annual meeting in March next year.
If Oracle candidates are all elected at the meeting, they would have the power to dissolve a poison pill that allows PeopleSoft to issue more shares and thwart a takeover.
The week’s developments followed talks initiated by Oracle last weekend with the aim of announcing a deal before the market opened on Monday, but PeopleSoft was unwilling to budge - reiterating its view that its own business plan created superior value for shareholders.
It also rejected Oracle’s suggestion that more than 60 per cent of its shares being tendered by stockholders was a decisive vote for the deal. However some others have viewed it as a demonstration by shareholders do not want Mr Ellison to walk away from the deal.
Retail chief quits BT
Rumours of a boardroom split at BT were fuelled by the surprise resignation of Pierre Danon, the affable Frenchman who heads up its retail operations.
Mr Danon, who leaves for a senior post at Capgemini early next year, had sometimes threatened to overshadow BT chief Ben Verwaayen by regularly courting publicity and maintaining a high profile in the City.
Mr Danon’s departure triggered further speculation of a rift between the two executives over the clash of interests between BT’s wholesale arm and its retail business.
In recent weeks, Mr Danon had spoken about wanting to invest in local loop unbundling in order to allow BT Retail to carry broadband internet traffic at cheaper rates, thus allowing to compete more aggressively with rivals.
However, LLU requires the installation of expensive equipment in BT’s local exchanges at a time when the company is facing a string of challenges weighing on its finances - including greater competition, a multi-billion pound projct to digitalise its entire infrastructure and pressure from regulators to further open up its network to rivals and ensure they receive the same deals from BT that it offers its own retail arm.
The ongoing quandary for BT, the former UK telecoms monopoly, has intensified since Ofcom, the communications regulator, demanded earlier this month that BT come up with a blueprint to force its retail and wholesale units to function as separate entities.
Meanwhile, if there were any cracks in the relationship between Mr Verwayyen and Mr Danon, they did a very good job of papering over them.
Mr Danon received an unprecedented send off for a departing executive, with his own press conference including an informal appearance and friendly banter from Mr Verwaayen himself.
In the end, it was likely that frustrations with BT Retail’s regulatory shackles, which prevented it from undercutting rivals’ prices, prompted Mr Danon’s exit rather than any animosity with his chief - ambition and a lucrative pay deal not withstanding.
China toughens up on foreign software
International IT groups could find themselves fenced out of the rapidly growing chinese market as the country looked set to issue rules on the extent to which government departments must favour operators closer to home.
Software groups such as Microsoft are likely to be jittery in the run up to the ruling, as officials who have eyed the draft policy said it intended to give more weight to domestic suppliers.
It is thought that government buyers will be forced to distinguish between software that is domestic, non-domestic and preferred domestic. Departments will have to apply for permission to buy non-domestic software.
China’s ministry of science and technology was quoted criticising costly and faulty foreign software and saying that some local chinese governments were paying no regard to national interest and security.
The ruling was brought sharply into focus as the Beijing municipal government purchased about $3.5m worth of Microsoft’s software. The deal raised eyebrows among chinese rivals, who said they were not offered a chance to bid. Local media also grabbed the opportunity to question why the US “monopolist” had been favoured over local suppliers.
Microsoft played down the impending decision, saying it believed details had not yet been finalised. Overseas groups with sufficient presence in China could be able to win “preferred non-domestic” status.
Cingular to slash staff
Cingular Wireless kickstarted the rationalisation of its business following its $41bn purchase of AT&T Wireless, completed last month.
Cingular, the US wireless operator jointly owned by SBC Communications and Bell South, said it would slash about 10 per cent of its combined staff or about 7,000 jobs.
The move was expected with some analysts predicting that the cuts would go even deeper, perhaps as much as 15 per cent.