Subject:  Examining the Swainson Move - Is IBM Planning to Buy Out CA? |
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Date Posted: 03:30:18 11/25/04 Thu
Examining the Swainson Move - Is IBM Planning to Buy Out CA?
"Usually an IBM guy has to take six months off before jumping to a key competitor"
November 25, 2004
Summary
"Have IBM's stringent non-competes suddenly gone soft?" asks Maureen O'Gara. "Usually an IBM guy has to take six months off before jumping to a key competitor," she adds, whereas John Swainson quit Friday and was at CA Monday - yet CA and IBM are bitter competitors in a number of product areas, especially the high-end enterprise market. "Maybe it's the first domino in a scenario where IBM buys CA out," muses O'Gara.
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Computer Associates getting IBM veteran John Swainson as CEO - a move generally considered nothing less than brilliant - makes other ex-IBMers wonder how John managed to dodge the IBM border patrol and escape outside of a body bag.
After all, Swainson's appointment isn't like, oh, say, Fred Amoroso going to Crossworlds. That move was obviously blessed by IBM and to prove it IBM bought Crossworlds.
CA and IBM, on the other hand, are bitter competitors in a number of product areas, especially the high-end enterprise market. In fact, CA is probably IBM's biggest software competitor, especially for revenues, and Swainson is walking around with key knowledge of IBM's plans and strategies for years to come in his head.
So, have IBM's stringent non-competes suddenly gone soft?
Usually an IBM guy has to take six months off before jumping to a key competitor. Swainson quit Friday and was at CA Monday.
Is that why Swainson's gonna be serving that odd six-month apprenticeship under CA's interim CEO Ken Cron.
Did IBM sense that Swainson, a decorated 26-year IBM veteran and an archetypal team player, was frustrated and reorganize him out of WebSphere in July in a move outsiders didn't understand?
Either it wasn't an amicable parting and IBM will be watching Swainson like a hawk, or maybe it's the first domino in a scenario where IBM buys CA out.
Well, the way we hear it, Swainson was on Heidrick & Struggles little list from the beginning, but what reportedly clinched his availability was that IBM reorg that made him head of IBM's worldwide software sales group - and the reason for the reorg was reportedly IBM CEO Sam Palmisano's discontent with the numbers he was getting out of software.
The best guy to fix the problem was the guy who basically invented WebSphere, a product that went from zero to a billion dollars in five years, something few companies do. Evidently IBM counted a bit too much on Swainson's dedication to the greater good.
Reportedly the lawyers figure IBM can't get Swainson on non-compete grounds because IBM hasn't applied the restriction universally. It didn't pursue John W. Thompson when he went to Symantec, another, albeit smaller, competitor, for instance.
And supposedly what's in his head belongs to him. He's supposedly safe so long as he didn't take any physical IBM material with him.
Swainson, however, may have burned a few bridges behind him.
Reportedly IBM didn't know he was leaving until he resigned and supposedly his ex-boss, IBM Software chief Steve Mills, went "ballistic" when he heard.
During CA's conference call introducing Swainson Tuesday morning, CA's new CEO-elect spoke of CA being an integrated vendor-neutral security and systems management house that does business with the platform houses - IBM, Microsoft, Oracle, SAP and Sun. Wonder how relations with IBM will be going forward.
Sources claim it's unlikely IBM could ever acquire CA because of the antitrust hurdles.
Swainson's first job at CA will be to set strategy and product development while interim CEO Ken Cron continues to run the joint.
The task is probably crucial. There have been serious doubts about CA's future product strategy to the point that there has been speculation about the company's continued, independent viability. It'll be interesting to see whether CA's executive VP Mark Barrenechea survives the exercise and who all Swainson brings in from IBM.
Swainson Tuesday clearly distinguished CA from IBM saying CA wasn't a platform provider. He made it clear that CA and its 5,000 engineers would build products - not exactly something it's famous for since it's a patchwork quilt of mergers and acquisitions. Not that the M&A is going to stop. Swainson mentioned wireless a few times.
He spoke of looking for opportunities in immature technologies where CA could get a lead in time-to-market and ROI. He also knows he's got to do something about CA's atrocious, adversarial customer relations and do some confidence building.
Switching from one cult to another at the age of 50 requires re-programming, which is evidently one of the reasons why CA's got Kron sticking around for the next six months and transitioning Swainson into the job. Since Swainson hasn't been a CEO before, evidently he'll be going to CEO school on the job.
CA's situation is a bit more complicated than most because of that embracing settlement with the government that it cut to keep from getting hauled into court and there's that little matter of the court-appointed babysitter who's going to be poking around everything to make sure CA has learned its lesson.
Kron has flattened out the CA management structure since he took over from indicted co-conspirator Sanjay Kumar in April, substituting a team approach that Swainson seems to feel more than comfortable with.
CA chairman Lew Ranieri said Swainson had been elected to the board already and that the board itself will expand by another two outside directors by the end of the year. It will then be composed of 12 people. Whether it stays those same 12 people remains to be seen.
The company is supposed to name a new CFO "shortly" to replace HP refuge Jeff Clarke who was made COO as well when Kron took over.
CA, by the way, is paying Swainson $3.5 million.
http://www.sys-con.com/story/?storyid=47206&de=1
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