Risk Management

New CFO Steps into the Fire at CA

Nancy Cooper needs to get the beleaguered computer giant's financial house in order to meet its Sept. 30 deadline under a deferred prosecution agre...
Stephen TaubAugust 15, 2006

When Nancy Cooper officially takes over as executive vice president and CFO of CA on Tuesday, she begins a one-month race with the clock to help the company avert fraud and obstruction of justice charges.

Cooper, who formerly served as finance chief for IMS Health Inc., a provider of pharmaceutical and healthcare market intelligence, starts her job fills a vacancy created when former CFO Bob Davis was ousted in May. Davis, brought in in February 2005 to help the company recover from a major accounting scandal, was temporarily replaced by controller Robert Cirabisi while CA conducted an external search for Davis’s successor.

Now it’s up to Cooper to get the company’s finance department on an even keel in compliance with the deferred prosecution agreement (DPA) the company is operating under. CA has until September 30 to complete the fulfillment of a host of obligations—or face charges of fraud and obstruction of justice.

On June 15, in light of the fact that the that the company hadn’t yet hired a new CFO or solved a number of internal control issues, a court-appointed independent examiner found that he could no longer conclude that the company will be able to meet obligations under the DPA. Under those obligations, the company would have to improve its internal controls and reorganize the finance department for two straight quarters before September 30, according to a recent CA audit and compliance committee report.

If, as appears likely, the company hasn’t “substantially” implemented the required reforms for at least two straight quarters before September 30, the U.S. Attorney’s Office and the Securities and Exchange Commission may choose to extend the term of the independent examiner—and, presumably, the compliance period. Since the USAO and the SEC haven’t yet revealed their position, how much time Cooper has to set CA’s finance and internal controls house in order is still up in the air.

If there was any doubt that Cooper was starting work in the midst of a crisis, that was dispelled by the quarterly statement CA issued the previous day. On Monday, the embattled software giant reported a 64 percent plunge in first-quarter earnings in comparison to a year ago. The company also announced plans to cut 1,700 jobs, or 10.5 percent of its workforce.

CA needed a five-day extension to report its most recent results. A company spokesperson would not comment on whether Cooper’s start date was intentionally timed for after the company’s earnings announcement.

The company has also announced plans to shore up its sagging share price, which had fallen by 27 percent since the beginning of the year. CA said this week it will start repurchasing $1 billion in stock, the first phase of a planned $2 billion stock repurchase program. It will buy the stock through a combination of cash on hand and bank financing. The stock opened Tuesday up 9 percent on the news.

CA also said it is mulling a number of ways to execute the second phase of the program and will provide further details “when appropriate.” The company noted that it expects to complete the full $2 billion share repurchase plan by the end of fiscal year 2007.

Overseeing the remaining part of the stock-repurchase plan could very well be one of Cooper’s first major tasks. At IMS, she integrated the company’s financial systems and finance teams representing more than 100 countries. She closed 30 acquisitions during her tenure.

Before joining IMS, Cooper was CFO of Reciprocal, Inc., a digital rights management and consulting firm. “Nancy has broad experience as a chief financial officer in the software industry and with public companies,” John Swainson, CA’s president and chief executive officer, said last month when the company announced her hiring. “She has a successful track record in developing and leading high-performance teams.”

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