CA shows growth and profit, but reins in Q3 estimates

CA shows growth and profit, but reins in Q3 estimates

Computer Associates reported a 9 percent increase in its Q2 revenue but said its Q3 revenue and profit will come in a bit short of estimates.

Computer Associates International (CA) reported a 9 percent increase in its second-quarter revenue compared to last year's, as it completed a profitable quarter that Chief Executive Officer John Swainson called a solid sign of the work CA's new management team is doing to strengthen the battered company.

"We have aligned the business to our growth opportunities, put programs in place to encourage our sales force to become better partners to customers and made a number of key acquisitions to strengthen our product portfolio," Swainson said in a written statement. "We've also made good progress in transforming CA during the first half of the fiscal year."

CA's revenue for the quarter, which ended Sept. 30, was US$942 million, up from US$865 million in last year's second quarter. The company fell short of the US$945 million consensus estimate of financial analysts polled by Thomson First Call. CA's operating earnings per share were US$0.24, in line with analysts' consensus estimate.

Several acquisitions helped CA increase its revenue, such as its July purchase of IT governance software maker Niku and its June buy of network management technology developer Concord Communications.

CA, based in New York, had income of US$41 million for the quarter, up from a $98 million loss last year. New business bookings fell 11 percent during the quarter, to US$665 million, but CA called the drop-off an anticipated effect of its decision to decrease early contract renewals. The company has reworked its sales staff compensation this year to reward new business sales more than renewals of existing contracts.

CA reined in estimates a bit for the rest of its 2006 fiscal year, which ends March 31. For the current quarter, CA said it anticipates operating earnings per share of US$0.24, a penny less than the analysts' current consensus estimate, and revenue of US$950 million to US$980 million. Thomson First Call's current consensus called for US$980 million in revenue. CA similarly tugged its full-year revenue estimates down, setting its own forecast at revenue of US$3.8 billion to US$3.85 billion. Thomson First Call's consensus had a US$3.852 billion estimate.

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