Computer Associates Retrenches

Cron, who has been a member of CA's board since 2002, said that he was not a candidate to become permanent CEO. Asked on a conference call how long the company will take to find a new chief executive, Chairman Lewis S. Ranieri, said: "We have no sense of crisis. We want to search well, not quickly."

Ranieri also said that the company will not revert to the previous practice of combining the roles of chairman and CEO.

Clarke referred to the practice of backdating revenue as "totally unacceptable," and said CA will appoint a chief compliance officer and a chief accounting officer to be sure that the company prepares its books in an ethical manner. The company will also replace its proprietary accounting software with an industry standard package at a cost of $5 million to $10 million, he said.

CA is clearly struggling to avoid a criminal prosecution of the company itself, a move that would likely have crippling consequences, including the loss of lucrative government contracts.

Ranieri said that CA continues to work with government investigators, and said that the company's internal probe has consumed thousands of work hours and cost more than $30 million. The company looked at more than 1,000 license agreements, and analyzed more than 1.5 million documents and emails.

He said that any employee who does not cooperate will be fired, as nine members of the company's financial and legal teams were last week. "That sends an important message," he said.

Asked to define Kumar's new role, Ranieri was vague, saying that the former CEO will help take "products to the next level."

It's worth noting that Kumar implemented a new business model in the fall of 2000 under which software license revenue is recognized over the life of each agreement. Previously, revenue was generally recorded upfront. The change removes the incentive to recognize revenue prematurely.

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