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9 October 2003 Three senior executives at Computer Associates (CA) have resigned as a result of an investigation into the company's revenue recognition and accounting practices.

An internal probe suggested that the three were responsible for recording revenues in 2000, which should have been deferred to a later period, according to a statement from the company.

They were named as chief financial officer Ira Zar, a 21 year veteran of the software giant, senior vice president for finance Lloyd Silverstein and David Rivard, vice president for finance.

CFO Zar was responsible for introducing a big change in CA's revenue recognition policies in 2000. Instead of reporting all the revenue from a multi-year contract up-front, it would recognise it year-on-year in a manner more consistent with the way in which customers actually pay.

The company is also the subject of a class action lawsuit from stockholders who claim that the company's old method of revenue recognition led to sharply inflated sales figures being recorded.

They argue that CA had artificially inflated sales figures by persuading companies to renew their contracts halfway through. Under its old accounting policies, the company could recognise this revenue immediately, even though payment might be some years off.

The change to the company's revenue recognition policy was motivated by a need to disguise the sharp drop in revenue that would inevitably occur when technology spending softened, they claim.

CA's internal probe is being led by former SEC chief accountant Walter Schuetze.

The latest revelation coincides with an investigation into CA's accounting practices being conducted by the US Department of Justice and Securities and Exchange Commission (SEC), the US the stock market watchdog.

• Two separate results forecasts suggest that the recovery in the technology sector is gathering pace.

  Enterprise applications software vendor SAP yesterday issued a forecast that exceeds analysts' consensus expectations, just days after CEO Henning Kagermann had warned that price competition with rival Oracle was intensifying.

  SAP said that it expected to report third quarter sales of €1.65 billion, down 3.1% on the €1.7 billion reported a year earlier, but ahead of analysts' expectations of €1.62 billion.

  While software licence sales were expected to fall marginally, SAP's forecast, again, was better than analysts' expectations. SAP's forecast follows a similarly upbeat announcement from PeopleSoft late last week.

  Coinciding with SAP's release, semiconductor maker Advanced Micro Devices (AMD), said that it had enjoyed a "great" third quarter, while Taiwanese foundries claim that they are operating at capacity, suggesting strong and increasing demand for computer hardware.