CA shows growth but reins in Q3 estimates

IDG News Service - Computer Associates International Inc. reported a 9% increase in its second-quarter revenue compared with the same quarter last year, as it wrapped up a profitable quarter that CEO John Swainson said was a solid sign of efforts by CA's new management team to strengthen the battered company.
CA's revenue for the quarter, which ended Sept. 30, was $942 million, up from $865 million in last year's second quarter. The company fell short of the $945 million consensus estimate of financial analysts polled by Thomson First Call. CA's operating earnings per share were 24 cents, in line with analysts' consensus estimate.
Several acquisitions helped CA increase revenue, including its July purchase of IT governance software maker Niku and its June buy of network management technology developer Concord Communications.
"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 statement. "We've also made good progress in transforming CA during the first half of the fiscal year."
Islandia, N.Y.-based CA had income of $41 million for the quarter, up from a $98 million loss last year. New business bookings fell 11% during the quarter, to $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 24 cents, a penny less than analysts' current consensus estimate, and revenue between $950 million and $980 million. Thomson First Call's latest consensus called for $980 million in revenue. CA similarly tugged its full-year revenue estimates down, setting its own forecast at revenue of $3.8 billion to $3.85 billion. Thomson First Call's consensus estimate was $3.85 billion.
In a conference call with analysts, Swainson cast the shortfalls as a minor concern to a management team focused on long-term rebuilding. "As we go through this transition, it's not going to be as pretty as Wall Street would perhaps like it," he said. "You're going to see lumpiness in the results."
Swainson joined CA in late 2004 after an accounting scandal forced out former CEO Sanjay Kumar and much of his management team. CA "is still not performing as well