Blood on the carpet: CA braces itself for coup d'etat

A disgruntled shareholder has launched a bid to force Charles Wang from his position as chairman of Computer Associates (CA).

Texan entrepreneur Sam Wyly has initiated a 'proxy solicitation' of CA's shareholders to vote out the current management team, which includes chairman Wang, CEO Russell Artzt and five other executive vice presidents.

Wyly claims the management team has been using a change in its accounting practices to hide the poor performance of the company.

He accused the management of using accounting gimmicks and creating a pervasive culture of fear and intimidation.

Pro forma invoicing was recently introduced by Wang to offer a clearer view of the company's status as it allows the value of the contract to be spread over the life of the contract thus showing its worth quarter on quarter.

Previously the company reflected the whole value of the contract in a specific quarter's figures, thus giving a skewed view of the company's health.

Steve Barrie, chief analyst at Bloor Research, said: "Pro forma gives a better view of cash in the business now as opposed to a predicted amount.

"But it is a big issue as for two years shareholders won't be able to make a judgement of CA's performance - it would be like comparing apples and pears with one year based on pro forma and the other not.

"You need two years figures based on the same accountancy methods to get an accurate view," he added.

He claimed CA has performed no worse than any other company caught in the current downturn.

"Wyly thinks CA is using the change to pro forma as an opportunity to hide weaknesses in performance but it seems more co-incidental and looks worse than it is.

"CA is not struggling as others are and they are big enough to see themselves through."

The Texan will ask shareholders at a meeting on 29 August to elect eight board members with himself as chairman. His plan also includes splitting the company into four different divisions such as storage, systems, security and knowledge management software.

Key to Wyly's coup is securing the backing of Walter Haefner, a Swiss entrepreneur who owns a 21 per cent stake in CA.

Bloor's Barrie didn't think Wang will be too worried by the threat.

CA was unavailable for comment