CA Posts Mixed Results

Computer Associates International Inc. (CA) (NYSE: CA) posted its financial results for the first quarter of 2005 last night, reporting revenue of $860 million, up 9 percent on the same quarter last year, and up $10 million on guidance provided earlier this month (see CA Reports Rising Q1 Revenue).

Non-GAAP earnings per share were 21 cents, up from 14 cents in the same period last year. GAAP earnings were 9 cents per share, compared to 1 cent in the corresponding quarter a year ago.

Earlier this month, the Islandia, N.Y.-based firm warned that its revenues for the quarter were likely to be between $830 million and $850 million -- 3 percent to 5 percent below its original guidance. However, during yesterday's earnings call, CAs CFO Jeff Clarke claimed the company’s results were buoyed by "excellent expense controls" and pointed to strong performance in its security and storage products.

Revenues for CA’s security products were $103 million during the first quarter, more than double the figure for the same quarter last year. Clarke also highlighted the company’s Brightsor storage management range, noting the 25 percent year-over-year revenue growth enjoyed by CA’s ARCserve Backup offering.

But CA is by no means out of the woods: The company lowered its revenue guidance for the full fiscal year 2005 to between $3.4 billion and $3.5 billion. The company’s previous guidance had been in the range of $3.5 billion to $3.7 billion. The fact that the company's services operation did not perform "as well as anticipated" during the quarter was a major factor in the decision, according to Clarke.Things have not exactly been rosy at CA recently. In April, CEO Sanjay Kumar stepped down as the tremors from the company’s accounting scandal reached the boardroom (see Kumar Leaves CA). The company also restated certain financials for fiscal year 2000 and 2001 after CA’s Audit Committee found that a total of $2.2 billion in revenue had been booked prematurely.

Interim CEO Ken Cron admitted that the last quarter had been “challenging,” both internally and externally. Not surprisingly, CA execs made only passing reference to the U.S. government’s ongoing probe into the company, although one official did confirm that CA has so far spent $47 million on the investigation.

In addition to a renewed focus on the channel during the coming quarters, Cron also promised some “acquisitions that make sense for our business,” although he did not provide any further details.

With users increasingly choosing specialized software vendors, many of which are startups, for in-depth analysis of their data, there has been speculation that CA may be planning to make an acquisition in this area. These vendors’ products work with offerings such as CA’s Unicenter to provide users with additional levels of data analysis (see CA Warning Points to Product Holes).

— James Rogers, Site Editor, Next-gen Data Center Forum0