CEO Ouster a Positive Step for Computer Associates

Kumar's fate was thrown into question when Ira Zar, the company's former CFO, pleaded guilty earlier this month to obstruction of justice and fraud in the accounting scandal and agreed to cooperate with prosecutors. David Rivard and David Kaplan, former vice presidents of finance at CA, pleaded guilty to obstruction of justice and securities fraud conspiracy and face a maximum sentence of 10 years in jail.

"We believe the decisions we have made today are fair and responsive to the situation and in the best interests of CA's customers, shareholders and employees," Ranieri was quoted saying in a release announcing the firing. "The audit committee's and the entire board's exhaustive review of these matters resulted in the removal of a number of individuals from the company.

"The changes in Sanjay's role are not based on the conclusion that he engaged in any wrongdoing. Nonetheless, the conduct in question occurred during his tenure, and the board felt this action was appropriate," Ranieri said.

Richard Petersen, who follows the company for Pacific Crest Securities, said that despite the alleged wrongdoing, Kumar deserves at least some of the credit for CA's vastly improved relations with customers. "In the past, customers did business with CA because they had to. Now, they do business because they want to," he said.

Still, his ouster was necessary. "Investors were reluctant to be involved cause of the scandal's overhang. Getting rid of that distraction is a key step," he said. (His firm has not done investment banking for CA.)

To be sure, an indictment of the company isn't out of the question. It's also possible that the European Union could levy a harsh fine against the company.

But for now, it appears that CA is on the road to recovery.

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