Hard as it may be to think of Computer Associates(CA Quote) as anything but a case study in irresponsible management, it's worth remembering that the Long Island-based giant was the Oracle(ORCL Quote) of its day in the mid-1990s. It dominated its sector, mainframe and system management software, it was headed by a hard-charging, controversial CEO, and most importantly it swallowed competitor after competitor during its rise.
Why wander down memory lane? Because CA, according to A.G. Edwards analyst Kevin Buttigieg, illustrates how the market values companies that attain most of their growth through acquisition, while evidencing limited organic expansion. The answer: not as well as you might think.
In CA's heyday -- 1995 to 1998 -- its stock traded at a 23% discount to the software industry's relative price-to-earnings ratio and at an approximate 10% premium to the valuation of the S&P 500. ...
Recent Comments
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 10,309.92 | 1,091.49 | 2,138.44 | 32.31 |
Oil *
77.12
|
|
DOWN
154.48
|
DOWN
19.14
|
DOWN
37.61
|
DOWN
0.48
|
10 Yr
3.23%
SPDR Gold
115.06
|
|
-1.48%
|
-1.72%
|
-1.73%
|
-1.46%
|
Data delayed 20 minutes |
Connect with TheStreet