Computer Associates International Inc. grew its revenue by 4 percent to $778 million in its third fiscal quarter for 2003, which ended December 31.
The Islandia, N.Y., company narrowed its third quarter net loss to $44 million, compared to a net loss of $231 million for the same quarter a year earlier. CA beat Wall Street consensus for operating earnings per share by a penny at five cents a share, compared to a loss of six cents a share last year, according to Sanjay Kumar, CAs chairman and CEO.
"I am more convinced than ever that the new business model we adopted was one of the smartest things we ever did. It let us perform well in a difficult spending environment," said Kumar, referring to CAs switch to more flexible software licensing terms and deferred subscription revenue recognition.
During the quarter new deferred subscription revenue was $538 million, or $192 million annualized across CAs average contract life of 2.8 years. The annualized figure represents a 22 percent increase over last year.
Despite talk of increased IT spending and the fact that CA saw "slight spending increases at the close of the calendar year, customers are still very much focused on… very clear returns on their technology investments," said Kumar during CAs earnings call this afternoon. CA doesnt expect to see a "marked improvement" in IT spending for the next few quarters, he added.
Still, CA saw an increase in the volume of new contracts it signed with customers during its third fiscal quarter, and the number of multi-million dollar contracts that it signed increased to six from two in the previous quarter. One of those contracts, valued at over $10 million, was led primarily by CAs enterprise management software, Kumar said.
Questions about past CA business practices continue to dog the software behemoth, as reports surfaced about government agencies requesting copies of CA contracts. Some 10 customers were asked to show their contracts to government agents investigating CAs business practices.
For its fourth fiscal quarter, CA expects to generate revenues in the range of $785 to $800 million. For the full fiscal year, CA anticipates it will generate revenues of $1.3 billion. Earnings per share are expected to reach five or six cents for the fourth quarter, with full year diluted earnings expected to be 16 or 17 cents. Kumar pointed out that that estimate exceeds earlier guidance of 14 to 16 cents.