Management A Key Component For Corporate Success; Liberum Research Examines Management Change at Three Companies: Computer Associates, Toro and Federal-Mogul

NEW YORK--March 7, 2005--Top management remains one of the key components to a successful corporation. At times overlooked by investors, management that successfully demonstrates a strategic focus, understands its corporate assets and deficiencies, and consistently executes will, more often than not, have a direct impact on the company's bottom-line and future success.

Liberum Research, a consulting company that tracks and assesses management change, released the latest February 2005 statistics for top management changes at public firms and selected three companies where management change was highly significant. According to Liberum's senior research analyst, Richard Jacovitz, "February 2005 was a highly active month for management change." Liberum compiled 919 top management changes for February, 131 CEO and 133 CFO related. Top sectors were Drugs/Biotech (91), Banking (73) and Telecom (59). Liberum selected three companies that underwent significant management change in February: Computer Associates (CA), Toro (TTC), and Federal Mogul (FDMLQ.OB). Each underwent a change in top management for different reasons.

Computer Associates (CA) -- One of the world's largest software companies, CA provides software for a variety of enterprise related tasks. It also offers services such as consulting, implementation, and training. In November 2004, after the company underwent a series of scandal-ridden problems, the board chose John Swainson, an IBM veteran as the CEO-elect.

A few years ago CA became embroiled in an SEC investigation into the firm's accounting practices. The investigation ultimately led to the resignation of former CFO Ira Zar in late 2003. The investigation continued into 2004. Under mounting pressure, the firm's leader, Sanjay Kumar resigned as chairman, president, and CEO in April 2004. In September 2004, CA agreed to pay $225 million to shareholders in order to avoid criminal prosecution by the SEC and US Justice Department for fraudulently recording and reporting revenues. For seven months after Kumar resigned, CA pursued an extensive executive search. In the interim, the board made Kenneth Kron, a board member, the interim CEO. Kron was passed over by the board who went with John Swainson a highly successful 26-year veteran at IBM.

Swainson after being chosen as the new CEO initially came into CA as a CEO in-training. Kron was left in charge for another six months. The interim appointment step raised questions about Swainson's ability to take immediate charge. Swainson's formal move to the top in early February 2005 came quicker than originally planned.

According to Jacovitz, "Swainson was a superb choice for CA, a company racked by scandal and often perceived in disarray by customers, partners and the competition." He believes, "Swainson has the necessary qualifications and talent to help turn the company around." As a seasoned software outsider with a tenacious sales orientation, Swainson has brought a new level of sophistication to CA management. While with IBM, Swainson was credited with making IBM's middleware product, Websphere, a success. In just five years, he turned a business that did not exist into a billion dollar revenue generator. He is also someone who intimately understands IBM, one of CA's major competitors. In a short time, Swainson has implemented a series of measures including a new management structure intended to avoid the potential for accounting problems that have plagued the firm and a new focus on customers. Jacovitz said, "Swainson should be considered the hiring of the white knight from the outside to help rescue a floundering company."

Toro (TTC) -- A 90-year old manufacturer that has had a talent for responding and adapting to dramatically changing markets. Toro makes lawn mowers and other products for professional and residential use. The company is split between the residential (35%) and professional (65%) markets. While better known in the residential space, the company's future lies in the commercial arena. In 1983 Toro chose a 13-year veteran of the firm, Kendrick Melrose to be its CEO. Melrose has served as CEO for close to twenty-five years. Under his stewardship the company, despite intermittent setbacks, has thrived. Even with intense competition and markets dependent upon weather, Kendrick has guided the firm to continued success.

At the top of his game, Melrose chose to step down and assume the role of executive chairman of the board. In his place, the company chose Michael Hoffman, the current President and Chief Operating Officer. Hoffman, a 27-year old company veteran, has run most of the company's divisions at some point. Apparently groomed for the position, Jacovitz said, "Hoffman was a smart choice." Jacovitz believes, "Hoffman's greatest challenge will be maintaining Toro's stellar ratings and continuing the firm's steady growth in revenues."

He stated, "unlike an outsider, Hoffman fully understands Toro, why it has been succeeding, where its possible deficiencies are, and what potential opportunities lie ahead." Prior to his position as President and Chief Operating Officer, Hoffman was a group vice president for the consumer, landscape contractor and international businesses which represented well over half of the company's revenues. Jacovitz said, "Toro's management change at the top was an example of the classic succession strategy that was well planned and executed." He believed, "new top management should be viewed positively both by customers and investors alike."

Federal-Mogul (FDMLQ) -- Federal-Mogul is a global automotive parts manufacturer of components for cars, trucks and construction vehicles that employs 45,000 people worldwide. The firm's principal customers include many of the world's original equipment manufacturers of vehicles and industrial products. The company also distributes auto parts to aftermarket customers. In October 2001, the company filed for Chapter 11 bankruptcy protection as a result of the numerous asbestos lawsuits it inherited from an earlier 1998 acquisition of UK firm, T&N plc. Federal-Mogul has been struggling throughout this period to pull out of bankruptcy. Since being forced into Chapter 11 bankruptcy in 2001, the company has gone through four CEOs including one interim CEO. The latest management change took place this February when Federal-Mogul selected Jose Maria Alapont the former energetic and results-driven CEO of Iveco SpA, Fiat's truck and bus unit and a former executive at American Delphi Corporation.

According to Jacovitz, "Alapont is a take-charge executive who has repeatedly demonstrated he can turn things around at complex companies. His greatest drawback is that he has rarely stayed in one executive position for any extended period of time." In his most recent stint as CEO of Iveco, the Fiat truck and bus unit, he remained in charge for only 18 months before deciding to jump ship and take on the challenge of running Federal-Mogul and guiding it out of Chapter 11 bankruptcy protection. Despite the relatively short stint with Iveco, Alapont had a measurable impact on the firm and, many think, may have been the key to starting the company's overall turnaround. Upon taking on his new position with Iveco its was claimed he re-wrote Iveco's corporate strategy within a week of taking office and followed the strategy changes with a number of high-level managerial firings within his first year on the job.

As Jacovitz saw it, "the task Alapont has ahead of him at Federal-Mogul is far more challenging than anything he undertook previously." Up to this point, there has been little optimism that Federal-Mogul could find the way out of its troubles. None of the previous CEOs at Federal since the 2001 Chapter 11 have been able to take the right steps. Jacovitz stated, "the selection of Alapont while brilliant, is still far from a win-win situation. Alapont's take-charge, driving personality and extensive background in the automotive parts industry is exactly what is needed to get things moving again with the firm. Whether he can find the right formula for exiting from the Chapter 11 bankruptcy in one-piece remains a tall order, but he has what's needed." Alapont can be expected to handle the position similarly to how he managed while at Iveco and earlier with Delphi Automotive Systems Corporation where he served as President of International Operations and Vice President of Sales and Marketing.

Liberum Research (http://liberum.twst.com), The Independent Research Arm of the Wall Street Transcript, is focused on Corporate Management. Liberum has the only online industry-wide database of Management Change. Liberum also provides management change related consulting services intended for the investment community.