Two leading vendors in the IT systems and performance management tools fraternity, CA and Compuware, have released quarterly earnings results and shed light on future plans for their respective product and services strategies.
On Jan. 28, both CA and Compuware announced third-quarter earnings. In addition, CA announced the appointment of William McCracken as its CEO.
“Over the past five months, Bill has helped direct the day-to-day management of CA and has been integral in developing and executing the strategy to position the company for market leadership,” said Gary Fernandes, lead independent director at CA, who headed the board search committee, in a statement. “We had the benefit of watching him lead the company and it became evident to us that Bill McCracken has the knowledge, industry expertise and experience to take CA to the next level. The board unanimously decided that Bill was the best choice to sustain the company’s momentum and lead it going forward.”
McCracken joined CA’s Board of Directors in 2005 and became non-executive chairman in 2007. Prior to joining CA, McCracken held numerous executive positions at IBM during his 36-year tenure, most recently as a member of the Chairman’s Worldwide Management Council and general manager of IBM’s printing division. He previously served as president of IBM’s EMEA and Asia PC Company and as general manager of marketing, sales and distribution for IBM PC Company.
“Over the past few months, CA has introduced a number of new and enhanced products in the security, IT management, virtualization and automation spaces and made investments to bolster our cloud computing offerings by acquiring NetQoS and Oblicore,” McCracken said. “These moves strengthen our position as a leader in next-generation infrastructure management.”
CA’s North American revenue was $655 million, up 7 percent in constant currency and 8 percent as reported from the prior year period, while international revenue was $473 million, down 1 percent in constant currency and up 9 percent as reported year-over-year. Overall revenue was $1.13 billion compared to $1.04 billion for the same period a year ago.
During an earnings call with analysts, McCracken said, “Revenue for the period was up, cash flow was strong and we again improved operating margins. Another important indicator, revenue backlog, was up – both total revenue backlog and short term.”
Listing CA’s highlights for the quarter, McCracken said:
“??Ã First, while still in early stages, we made progress getting our EMEA and Services businesses back on track.??Ã Second, Security – our Identity and Access Management business reported record new product sales.??Ã Third, Clarity – our project and portfolio management solution – had one of its best quarters ever, with more than 40 new customers added in North America alon??Ã Fourth, Mainframe 2.0 and our initiatives designed to change mainframe management continue to drive momentum in the business. Since its introduction in May, mainframe software manager – the first deliverable in the Mainframe 2.0 initiative – has been deployed by more than 150 customers.??Ã And, finally, our application performance management business recorded its strongest quarterly performance ever. CA Wily now manages the world’s most mission critical business services, including nine of the world’s top 10 banks, the world’s top 10 telecoms and the world’s top four entertainment companies.“
Meanwhile, also reporting its third quarter earnings, Compuware saw software license fees of $52 million compared to $53.1 million (excluding divested products) and $60.5 million (as reported) in the third quarter last year. Maintenance and subscription fees were $117.6 million in the third quarter compared to $108.5 million (excluding divested products) and $116.6 million (as reported) in the third quarter last year. Revenue from professional services in the third quarter was $60.3 million, compared to $91.5 million in the same quarter last year.
“Compuware’s third quarter performance featured solid execution against each of our key growth drivers, as well as strong profitability and cash flow,” said Compuware President and Chief Operating Officer Bob Paul, in a statement. “Our strategy of streamlining operations and increasing focus on areas where we have industry leadership is working, and Compuware is well-positioned to deliver continued progress in financial performance.”
Cloud Computing an Area of Interest
On a Jan. 28 call with analysts, Paul said, “Overall, Compuware posted a nearly 30 percent year-over-year increase in total product commitments. Total products revenue increased 5 percent compared to the same quarter last year. Additionally, professional services revenue, excluding Covisint, is up sequentially to $49.4 million along with improved margins.”
In addition, overall, Compuware posted a nearly 30 percent year-over-year increase in total product commitments, Paul said in the call. Total products revenue increased 5 percent compared to the same quarter last year, he said.
“The acquisition and integration of Gomez makes Compuware the only provider of a single dashboard that optimizes application performance across the Web, the cloud and the enterprise,” Paul said in a statement. “This unique value proposition is winning with customers, prospects and analysts, as demonstrated by the acceleration of Vantage revenue and the strength of Gomez’ performance. We’re also achieving great traction with Covisint and our SAAS [software-as-a-service] solutions, highlighted by Covisint’s revenue growth of more than 22 percent.”
Indeed, Gomez, with its Web performance monitoring technology, is a key piece of the Compuware strategy going forward. And the cloud environment appears to be clearly within Compuware’s sights.
During Compuware’s call with analysts, Paul alluded several times to the cloud, indicating cloud computing as an area of interest for the company, but avoiding any specific details.
Paul decried Compuware’s “unique capability to optimize application performance in the data center, in the cloud or on a mobile device is gaining momentum in the application performance marketplace. This is a new, disruptive change to the market made possible through the Gomez acquisition.”
He also said: “Starting in February, we expect to introduce some very exciting solutions addressing private, public and hybrid cloud performance. We are also rapidly extending our penetration of vertical industries, including retail, media and publishing, and SAAS users and providers.”
Paul also mentioned the promise of the cloud environments moving forward. “We will not see mainstream adoption of cloud computing until performance is resolved and until security issues are resolved, and we have some great opportunities to own those spaces,” he said.
Meanwhile, in addition to third quarter moves such as acquiring Gomez and announcing an integration between Compuware Vantage and Gomez, Compuware made a series of additional moves worth noting, including:
“??Ç Launching a Mainframe Cost Savings Program for its Mainframe Solutions customers. As part of the program, customers receive a free cost-savings assessment, a road map to future mainframe operational costs savings and the opportunity to win a grand prize of $1 million.??Ç Announcing that recently retired General Motors’ CIO Ralph Szygenda joined the Compuware Board of Directors.??Ç Joining the Cisco Developer Network as a Solution Developer and announced that Compuware Vantage successfully completed Cisco verification testing for integration with the Cisco Network Analysis Module (NAM) product line.??Ç Offering online retailers free Gomez Web performance monitoring and consulting services from Black Friday through Cyber Monday to identify and resolve the source of Website errors, outages or slowdowns to optimize performance.??Ç Announcing the availability of the Compuware Financial Analysis Support Tool (F.A.S.T.), which calculates the financial impact of Web page load times. F.A.S.T. helps companies calculate how much revenue is at risk from slow Web page load times.??Ç Launching a new initiative to increase the profitability of mobile data service providers by empowering them to improve and manage the customer data experience. Compuware Vantage for Mobile is an integrated solution to provide a real-time view of a customer’s mobile data services experience and linking it back to key business functions.??Ç Announcing that its Covisint subsidiary launched AppCloud, a secure application marketplace that allows health-care technology providers to offer their solutions to Covisint communities.“