CA plans layoffs

The vendor is cutting costs in the wake of lower net income

CA has announced plans to lay off 1,700 staff in response to further disappointing financial results.

The software vendor recorded a net income of $35m for the first quarter, down from $97m in the same period in the previous year. The fall is partly due to revenues not rising as fast as operating expenses.

While revenue for the first quarter increased by three percent to $956m, total expenses grew by nine percent to $905m, fueled by higher personnel and professional services costs, said CA.

Responding to the results, chief executive John Swainson said that the firm was not satisfied with its existing cost structure. “We are implementing an expense reduction plan to improve the company’s efficiency and competitive position,” he said. “These are the first steps in a long-term program to achieve a best-of-breed cost structure.”

Part of this restructuring will include cutting 1,700 jobs, about half in North America, and consolidating global facilities. CA expects these actions will save $200m each year once the restructuring is completed by early 2008 – although the changes will also cost the firm $200m to implement.

The latest figures followed lower-than-expected results for the previous quarter, which Swainson then attributed to an increase in sales expenses and a slow start in bookings for the period. CA had already laid off hundreds of staff last year and in 2004.

Meanwhile, in April this year, former CA chief executive Sanjay Kumar pleaded guilty to fraud charges relating to an accounting scandal at CA.