May 10, 2006 7:26 AM PDT
CA's Barrenechea splits for investment firm
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Menlo Park, Calif.-based Garnett & Helfrich raised an initial fund of $350 million, which it used to purchase and spin out existing businesses from larger corporations.
It purchased CA's Ingres database business as well as Nortel Networks' blade server business. Both are now independent companies.
Barrenechea will work with existing portfolio companies and be involved in raising a second fund, which Garnett & Helfrich intends to use to find investment opportunities in Europe and Asia. The second fund will focus on software, hardware, and media and communications, he said.
Barrenechea said the model of breaking off independent firms is compelling now because many public technology companies are "overequitized and underleveraged," meaning that they have lots of cash and no debt.
"I look at the galloping consolidation, and I think successful companies will continue to get more focused on core markets, which means they will shed more things," he said. "I do think the dynamics are changing."
Barrenechea, who joined CA from Oracle, was on CA's executive management team, which was replaced almost entirely following an accounting scandal at the management software company. Former executives, including former CEO Sanjay Kumar, who pleaded guilty to charges of financial fraud, could serve time in jail.
Barrenechea said he did not leave CA because of dissatisfaction with the company's ongoing turnaround. "This (departure) is more about the opportunity," he said.
He will work at CA until mid-June. A successor has not yet been chosen, he said.
Last month, CA warned that it will miss its fourth-quarter forecasts.