Texas billionaire Sam Wyly said he will mount a campaign to oust the management of mainframe computer software maker Computer Associates International Inc. But investors seem to doubt his ability to make good on the threat.
Shares of the Islandia, N.Y., company--the world's fourth-largest independent software firm--lost 11 cents Thursday to close at $33.69 in New York Stock Exchange trading.
Wyly accused Computer Associates' management of using "accounting gimmicks" and awarding themselves with "excessive compensation for lackluster performance." He charged that Chief Executive "Sanjay Kumar has run the company into the ground."
Wyly, who founded one of the first computer time-sharing networks and was chairman of Bonanza Steak Houses, sold Dallas-based Sterling Software last year to Computer Associates.
Tom Burnett, president of Merger Insight, an institutional research firm in New York, questioned Wyly's ability to follow through on the threat. Wyly "doesn't have much of a track record," he said.
Wyly, who owns less than 1% of the software giant's stock, said he will take his case directly to shareholders and force a vote during the company's annual meeting Aug. 29 to fire the current board and elect him chairman.
Computer Associates on Thursday defended its strategy and suggested Wyly would have a difficult time persuading the company's largest shareholder, Walter Haefner, to back a management coup d'etat. Haefner, 90, a Swiss investor, owns about 21% of the company.
"We strongly disagree with Mr. Wyly's charges and deeply resent his outrageous and self-serving assertions regarding our customers and employees," Computer Associates said in a statement.
Founded in 1976, Computer Associates grew by selling software for mainframe computers. In the last few years, it went on an aggressive buying binge and racked up an $8.4-billion debt.
Last year, amid criticism of its accounting practices, Computer Associates modified the way it booked sales to reflect when revenue was received as opposed to when contracts were signed.
The change, coupled with a steep downturn in corporate spending, forced Computer Associates to post a $5.9-billion loss on $4.2 billion in sales in its fiscal year ended March 31.
"We're not recommending the stock because we think it's hard to understand the actual growth of the company," said Christopher Galvin, an analyst with J.P. Morgan in New York.
Times wire services were used in compiling this report.