CAs 1Q Profit Rises

The embattled management software vendor credits "excellent expense controls" with a 50 percent rise in earnings over the year-ago quarter, but lower services revenues help lower its forecast.

Despite turmoil in the executive ranks at Computer Associates International Inc., the management software vendor beat its early July revenue and earnings estimates for its fiscal first quarter ended June 30.

The Islandia, N.Y., company earned 9 cents a share on revenues of $860 million in the quarter, versus the 5 cents to 7 cents a share and revenue ranging from $830 million to $850 million it forecasted July 8. Net income for the quarter was $53 million.

Still, the numbers were off from CAs guidance in the fourth quarter, primarily due to lower services revenue and a "higher mix of maintenance in the channel business," chief operating officer and acting chief financial officer Jeff Clarke said in an earnings call this afternoon.

Technology services revenues were down $4 million, which represents a 7 percent decline from the same quarter last year.

CA was not plagued by the delayed contract signings that other software companies cited in their recent quarterly reports, Clarke said.

Earnings for the fiscal first quarter showed a 50 percent improvement over the same quarter last year, due primarily to "excellent expense controls," Clarke said. The revenue increase was a 7 percent improvement over the same quarter last year.

"Against a backdrop of internal and external challenges, we are making great strides," commented Kenneth Cron, interim CEO at CA. Cron, a member of CAs board of directors, was asked to step in after chairman and CEO Sanjay Kumar stepped down during the quarter.

Kumar has since left the company, amid a continuing government investigation into CAs accounting practices. The companys search for a permanent CEO is ongoing, as is the search for a new CFO.

/zimages/5/28571.gifRead more here about the governments investigation.

Although CA did not see delayed contract signings, Cron acknowledged that it saw some pricing pressure, "but theres modest activity and modest growth," he added.

For the second fiscal quarter ending Sept. 30, CA expects to generate revenues of $830 million to $850 million and earn 3 cents to 5 cents a share. For the full year, CA lowered its forecast from earlier predictions.

CA now expects earnings between $3.4 billion and $3.5 billion, compared with earlier guidance of $3.5 billion to $3.7 billion. Earnings for the full year were lowered to 25 cents to 30 cents a share, versus earlier estimates of 28 cents to 33 cents a share.

Clarke attributed the change to the lower services revenues and a shortfall in subscription revenue.

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