"The industry was moving so fast there was no way any one company could
develop the client base or the technology to offer the totally integrated
solutions that clients were demanding," says Wang. "For us to grow steadily
we would be wiped out, in my view, in no time, or some other company
would come in and grab us. You can't just be a niche vendor because this
industry is such that integration of all these solutions is the key thing.
Otherwise you have what I call islands of technology.
The initial public offering on December 10, 1981 raised $12 million for
between ten and twenty percent of CA's shares. More importantly, it
secured Wang the publicly-traded stocks with which to go on an acquisition spree. "Even if you were willing to wait forever to build up the cash reserve to buy companies, the tax laws sometimes [make
it] better to do what they call pooling, which is to exchange [shares and]
merge instead of trying to pay for everything in cash. We had to have a
commodity, which is our stock, that had a good value that could be easily
established."
Soon after the IPO came CA's first acquisition, Capex Corporation.
"IBM had three major operating systems on their mainframes," recalls
Wang. "We were doing well in two of them, but we had to get into the third
one, [MDS in which Capex] was very very dominant.
Six secondary offerings followed the initial one, reducing Wang's ownership
to far below a majority interest. Several more mergers further diluted his
stake. The biggest was with Uccel in 1987 which increased CA's size by
50%. In September of 1989 CA merged a wholly-owned subsidiary with
Cullinet Software Inc, in another stock pooling arrangement. But CA's
expansion wasn't limited to stock swaps. In October of 1988, it paid $170
million for Applied Data Research (ADR), a systems software house.
By 1991, with 11,000 CA shareholders, Wang's personal stake was down to
6.5%. Keeping control, though, hasn't been a problem. Two of the six seats
on CA's board are held by Russ Artzt and Tony, who also occupy the
number two and three positions. A third seat, of course, is held by the
chairman of the board Charles Wang himself. Wang's position as CA's
absolute ruler couldn't be more secure, especially in light of the company's
impressive performance.
In fiscal 1990 which ended last March 31., CA's net after-tax income was
$158 million on revenues of $1.3 billion. This is three times the 1988
income of $55 million. For 1991 revenues are expected to show a solid
gain, with net income of about 15 percent of revenues. "We run a very
clean, neat, tight kind of business," says Wang proudly. "Somebody always
asks me, 'What's your share price at? Honestly, I don't know. What
difference does it make? I can't do anything about it today anyway. I'm
just doing the business."
[CONTINUED BELOW]
CA's impressive profit margin can be attributed in large part to its
determinedly lean management structure. Hierarchy is kept to a minimum.
Wang calls his managers player-coaches. In the interest of efficiency, on
occasions even a high-level executive -- Wang himself for instance -- will
not hesitate to roll up his sleeves and write a few critical lines of code.
That kind of hands-on involvement is very much a part of CA's corporate
culture.
"I used to take support calls," says Wang. "I still fool around with code.
It's not a big deal. If you're there, you do it. One of my guys was recently
showing me some of the code he wrote. He's an executive, a senior vice
president." Managers are expected to be personally familiar with
projects. "If I ask somebody about something, they should know. If they
don't I probably have a problem with him."
He persists in seeing CA as a small company. "Our mentality is that of a
little company. We watch what we spend, we invest very carefully and we
motivate our people because that's our most important asset, our people."
Wang is keen in preserving the informality of CA's salad days. The two
story Garden City, New York headquarters is soon to move to a new
building on a 64-acre site in Islandia. "Same floor as everyone else!" he
cries when asked where the executive suite will be located. "It's all offices
and cubicles. I have an office that's about 15 by 15 and that's it."
"No, that's a huge office," Wang corrects when I remark on its modesty. "15
by 15 is 225 square feet." With a touch of impatience, he adds, "You can't
get involved in all that bullshit. If you saw my office, it's truly a worker's
office -- papers all over the place. I have a computer [on my desk]." A
Samsung with a 386 chip that CA got at a good volume discount.
A part of keeping CA's structure flat is keeping himself out on the front
lines. Once a month Wang sets aside an entire day to meet collectively with
a group of 20 product owners. He does the same with senior sales people
and marketing people. "The thing that we don't let get in the way of us
doing the business is any kind of bureaucracy in terms of the structure and
things like that," he says. "Everyone knows that you have access to the
levels above you. That produces a flat structure because everyone knows
they can be heard."
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