Computer Associate’s CEO Charles Wang must bitterly regret the day he dreamed up the idea of launching the (failed) hostile takeover of $5.6bn services giant Computer Sciences Corp. While the reasoning was sound – to secure CA’s channel to market and maximize services revenues – a hostile takeover of a people-based organization was always likely to prove difficult. The failure also has other ramifications. With bitter accusations made between the companies, the future of a 1995 software license pact must now be in question. The agreement was extended last December when CSC made CA’s fast-growing Unicenter TNG its principal systems management product. CSC may now consider whether IBM’s rival product, Tivoli, is not more suitable. Meanwhile, Electronic Data Systems Corp is looking less likely as the next target for CA’s services ambitions (see Top Stories), but what about Perot Systems?. Billionaire Ross Perot, one time US presidential candidate, the founder of both EDS and $800m revenue services company Perot Systems Inc, returned to run privately held Perot last November in order to prepare it for sale. My role in life is to be the grain of sand that irritates the oyster that creates the pearl, Perot has said. Since his return, he has reportedly been doing plenty of irritating, slashing spending wherever possible. This time round, he is unlikely to find anyone to pay as much for his company as General Motors did for EDS – unless, of course, it is Computer Associates. If Perot is to get his pearl, it will be in the shape of a flotation on the Nasdaq exchange. With services companies commanding strong ratings, a valuation as high as $2bn is possible, say some analysts. But so far, none of the requisite filings for an IPO have been made with the Securities and Exchange Commission, and there have been reports that the company needs to strengthen its balance sheet before it will attract further investors. Whatever happens, if Perot still has eyes on the US presidency, he will want to hand control to someone else as soon as he can.
Computer Business Review.
