CA Inc., once one of Long Island's largest employers and the first software company to exceed $1 billion in revenue, announced Tuesday that it will lay off 1,000 workers, including about 135 on Long Island.
The Islandia company said the cuts represent about 8 percent of its global workforce and will enable it to focus on the growing market for cloud computing services, which allow computing power, applications and other business processes to be delivered as a service wherever and whenever it's needed as long as there is an Internet connection.
The move will cost the company $47 million in severance payouts but will result in a more focused and profitable CA, the company's chief executive and chairman, Bill McCracken, said in a letter to employees Tuesday.
"It's not enough to accelerate our growth. Our objective is profitable growth," he said.
But the change in focus requires a change in staffing, said McCracken, 67, who took over as chief executive in January.
Most of the layoffs will take place in the next three weeks.
CA's local job reduction of 135 "is not a major event" for an economy of Long Island's size, said Pearl Kamer, chief economist for the Long Island Association. However, any further job losses are not good news for the region's economy, especially with high unemployment likely to continue, making it more difficult for Long Island to recover, she said.
The Island's February unemployment rate was 7.9 percent, with 117,100 people out of work.
Job reductions are nothing new for CA, which has experienced the highs of becoming one of the world's largest software companies as well as the turmoil of a criminal investigation.
CA, founded as Computer Associates in 1976 by Charles Wang and Russell Artzt, grew to become the third-largest software company in the world by 2000. In 2004, Sanjay Kumar, Wang's successor as chief executive, stepped down amid a financial scandal and the company admitted wrongdoing, paying more than $225 million in restitution. Kumar later pleaded guilty to fraud and securities charges.
John Swainson, CA's previous chief executive, who retired in December, has been credited with steadying the company and regaining momentum. Under his tenure, the company underwent a "re-engineering" effort to cut expenses, consolidate office space, overhaul its troubled sales unit and reduce staff by some 3,000 jobs.
CA also will consolidate some facilities, saving another $3 million, the company said in a filing with the Securities and Exchange Commission.
CA's most recent quarterly report showed increased revenue and profits for the three-month period ending Dec. 31. The company had profits of $257 million, up from $208 million in the same period last year, on revenue of $1.13 billion, up from $1.04 billion in the year-ago quarter.
With Keiko Morris
In the clouds
Cloud computing refers to flexible, cost-saving subscription plans allowing clients to use variable amounts of data storage, software and other resources on the Internet, as needed. By centralizing storage, processing and other applications, consumers and businesses can access personal files at any computer with Internet access.
In the past year, CA Inc. has bought five companies, extending its ability to compete in the cloud computing field. Its acquisitions include:
3Tera, Aliso Viejo, Calif.
Cassatt, San Jose, Calif.
NetQoS, Austin, Texas
Oblicore, Waltham, Mass.