Computer Associates' Earnings Signal Red Flag

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How do matters fare with Computer Associates, owners of many products, including an accounting favorite, ACCPAC?

Very mysteriously, according to TheStreet.com's reporter Herb Greenberg. For example, a year ago right before the July 4th holiday, when reporters like Greenberg who write on financial matters are on vacation, the company reported that it was changing auditors, not for any reason other than it was time for a change.

Fast forward one year later to the eve of July 4th, 2000, and the company issued a statement that first quarter revenues would miss the expected mark. It blames the losses on lost income in European operations.

Where is this heading? According to Greenberg, Computer Associates is a much-heralded company because of its holdings, and the fact that it owns the New York Islanders, as well as the fact that NYSE chairman Dick Grasso is on the company's board of directors.

During a live Webcast on July 5, Computer Associates' president and COO Sanjay Kumar, said 'Revenue wasn't as strong in the quarter as we had hoped. We intend to work aggressively to address the performance issues in our European business. With the recently completed Sterling Software acquisition and a refocused sales and service organization, we feel very well positioned to capitalize on further opportunities in the eBusiness marketplace.'

Still, Greenberg thinks the red flags are flying. Stay tuned.

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