Computer Associates

» see ca.com as it lived, on the wayback machine

~ the goodbye ~

Computer Associates International began in 1976 with roots in two places at once, Switzerland and New York City, and its primary founder was Charles B. Wang. It sold system software for IBM mainframes, the layer underneath the applications that handles scheduling, storage and the other unglamorous work a data center cannot run without. That is a business with no consumer face at all and enormous switching costs, which turns out to be an excellent place to stand.

It spent most of its life on Long Island, first in Nassau County at Jericho and then Garden City, and for two decades after that in Islandia out in Suffolk. It moved back to Manhattan in 2014. It changed its own name twice along the way, to CA, Inc. and then to CA Technologies, both times shedding a little more of the description and keeping the initials. At its height it was the second largest independent software company in the world.

On 5 November 2018 Broadcom completed its acquisition at $44.50 a share, an enterprise value of $18.9 billion. CA survived the merger on paper as a wholly owned subsidiary, its stock was delisted from NASDAQ and deregistered, and two CA veterans, Greg Lotko and Ashok Reddy, took charge of Broadcom's mainframe and enterprise software divisions. Broadcom sold the Veracode security business on for $950 million almost immediately. Today ca.com lands on broadcom.com.

~ the chronicle ~

~ buying instead of building ~

CA did not write most of what it sold. It bought it. The strategy was to acquire smaller software companies in the IBM mainframe segment and then run the installed base for its maintenance revenue, cutting the acquired staff hard on the way through, and it worked for roughly thirty years because mainframe customers do not migrate off a working utility for sport.

The receipts are on this site. Applied Data Research, which sued IBM in 1969 and is a large part of the reason software has a price of its own, went to CA on 14 October 1988. Cullinet, the first software company to win a New York Stock Exchange listing, went in 1989. Pansophic Systems, whose Panvalet held the source code in a great many mainframe shops, went on 30 October 1991. PLATINUM technology, itself a rollup that had bought 48 companies in five years, went on 28 May 1999 for $29.25 a share. Sterling Software, a Dallas rollup that had absorbed about thirty companies, went on 31 March 2000 for 46.8 million shares.

Two of those were acquisition machines in their own right, which means CA was not just buying products, it was buying other firms' collections of bought products. Customers noticed what happened next, and the complaints were consistent across decades: support got worse and renewal negotiations got harder. Customers were still describing CA in those terms two decades on.

~ what the auditors found ~

In the early 2000s the company went through an accounting scandal over how it recognized revenue on long-term license contracts, backdating them so that bookings landed in the quarters that needed them. It was not a rounding dispute. Several former executives were prosecuted and went to prison, and the company spent years afterward operating under an independent examiner.

~ what broadcom kept ~

By the 2010s CA had largely recovered its standing. Industry bodies ranked it well on corporate responsibility and the scandal was behind it. What remained was a profitable and deeply unexciting enterprise software business, with mainframe revenue that refused to decline on schedule. That is precisely the profile Broadcom buys: durable contracts, low growth, costs that can be cut without the customers leaving, because leaving is a multi-year project nobody wants to sponsor.

So the ending is not a collapse. Nothing stopped working on 5 November 2018, and the mainframe tools CA assembled over four decades are still sold, now with a different logo on the invoice. The company that spent its life buying other people's software and billing the people who depended on it had the same thing done to it, by a buyer who had learned the method from somewhere.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »