CA Reports Narrowed 4Q Loss, Grows Revenue

Computer Associates International

Customers continue to buy products to meet immediate needs but not to fill forward capacity, which indicates clients' buying patterns continue to be conservative, said Sanjay Kumar, president and CEO of CA, in a conference call.

Kumar credited Islandia-based CA's subscription-based software licensing model with the improvements in the company's results.

"The new business model, our ability to sell short-term deals, our ability to go in and match the clients' expectations with respect to service and technology to solve business problems, I believe, came through in what is obviously a difficult environment," Kumar said.

During the quarter, CA became the subject of federal inquiries into its accounting practices by the U.S. Department of Justice and the Securities and Exchange Commission.

CA continues voluntarily to cooperate with those inquiries, Kumar said.

"We continue to believe that our historical accounting practices were consistent with GAAP [Generally Accepted Accounting Principles and what was required of us and look forward to having those matters behind us," Kumar said.

For the quarter ended March 31, CA reported a loss of $238 million, or 41 cents per share, compared with a loss of $410 million, or 71 cents per share, the same quarter a year ago.

On an operating basis, excluding acquisition amortization effect and special items, CA broke even for the quarter, compared with a loss of 29 cents per share the same quarter a year ago.

CA executives said the company did not expect to report break-even operating results until well into fiscal 2003.

Revenue for the quarter increased to $772 million, up from $730 the same quarter last year.

Wall Street analysts expected a loss of 4 cents per share on revenue of $770 million for the quarter, according to First Call/Thompson Financial.

Last month CA said its earnings loss for the quarter would be narrower than its earlier guidance for a loss of 4 or 5 cents per share and that revenue would be in line with guidance of $770 million.

For fiscal 2002, CA reported a loss of $1.10 billion, or $1.91 per share, compared with a loss of $591 million, or $1.02 per share, in 2001. CA reported revenue for 2002 of $2.96 billion, down from $4.19 billion in 2001.

For the first time since launching its new business model in October 2000, CA did not include its controversial pro forma accounting results in its report but did make them available in supplemental materials on its Web site.

For fiscal 2003, CA projects revenue in the range of $3.20 billion to $3.26 billion and operating earnings per share in the range of 10 cents to 13 cents per share. For the first quarter, CA expects revenue in the range of $770 million to $775 million and operating earnings to range from 0 to 1 cent per share.

Shares of CA closed up $1.19 at $19.10 prior to the announcement.