Computer Associates 2005 Annual Report Download - page 5

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CA 2005 PAGE 03
TO MY FELLOW SHAREHOLDERS,
As most of you are aware, Computer Associates faced enormous challenges in fiscal
2005
. However,
I can say without reservation that we exited the fiscal year in a much stronger position than
we entered it – and emerged with the ability to capitalize on a variety of exciting opportunities in fiscal
2006
and beyond.
Since joining the company in November
2004
, I have spoken with thousands of
CA
employees and
hundreds of customers, investors, analysts and reporters. I have come away with a deeper
understanding of our company, its market position and its internal challenges, which has given me
the necessary insights to begin charting a path for our future growth. Those are the topics I
want to discuss with you – our owners -- in this letter.
In many ways the history of Computer Associates mirrors the history of the modern Information
Technology
(IT)
industry.
Founded in
1976
,
CA
introduced its first software solution geared toward the mainframe
platform and quickly established itself by spotting trends and helping customers meet the need to
manage and operate their
IT
infrastructure efficiently. While the company continued to establish
a major presence in the mainframe software market, in the
1980
s
CA
recognized the significance of
the personal computer and acquired a number of products for the
PC
. In the
1990
s, as customers
began to diversify their production workloads beyond the mainframe,
CA
saw an opportunity to bring
mainframe-class tools and management software to the
UNIX
platform and became an early
leader in systems management in the distributed systems environment. Along the way,
CA
acquired
more than
50
companies and a portfolio of more than
1,000
products in virtually every category
of the software industry, from the mainframe to the desktop.
A TIME OF CHANGE
Yet by
2000
, the
IT
market had changed and
CA
’s strategy of aggressive category diversification
through acquisitions no longer was the engine of growth that the company previously enjoyed. The
post-
Y2K IT
slump and the dot-com crash of
2001
compounded the problem. The result was a
significant period of retrenchment for
CA
and – as shareholders are painfully aware – the start of a
very difficult period of internal and governmental investigations of the company’s past accounting practices.
Those issues intensified during the winter of
2003
and spring of
2004
, with the removal of
a number of executives, including the company’s
CEO
, and concluded in September
2004
with
CA
’s
signing of a Deferred Prosecution Agreement
(DPA)
with the Department of Justice. In that
agreement the company took full responsibility for past activities and agreed to make restitution to
shareholders and to undertake fundamental reforms, including the appointment of new management,
which is how I came to be president and
CEO
of your company.
Letter from President and Chief Executive Officer John Swainson
partners
potential
people
priorities
progress
CEO John Swainson
articulates CA’s
growth strategy.