Cloud Management, Security Tools Drive CA's Q3 Sales

CA Technologies' focus on IT management and security, particularly for cloud computing environments, appears to be paying off.

On Tuesday, the software company reported solid sales and earnings growth for its fiscal 2012 third quarter, a financial performance that "reinforces our belief that we have the right strategic plan in place," said CEO Bill McCracken in a call with financial analysts.

For the quarter ended Dec. 31, CA reported revenue of $1.26 billion, up 10 percent from $1.14 billion in the third quarter of fiscal 2011. Net income reached $263 million, up 32 percent from $200 million one year earlier.

The results included a $39 million license payment in connection with a 2009 litigation settlement with a software company CA did not identify. CA said that payment contributed 3 percentage points of revenue growth.

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The company said growth was driven by demand for its virtualization and service automation products, security software, Interactive TKO composite application development tools, mainframe software and professional services.

The third-quarter growth, "is well above average for CA Technologies given the last few years of low single-digit and negative revenue changes," said Technology Business Research analyst Jillian Mirandi in a commentary issued after CA's earnings announcement. The results marked the company's second sequential quarter of strong growth that indicates "more significant growth to come in 2012."

Beginning with the start of the current fiscal year CA reports financial results in three segments: mainframe solutions, enterprise solutions and services. In the third quarter sales of mainframe products was $682 million, up 9 percent year-over-year. Those numbers included the litigation license payment, which contributed 6 percentage points of growth in the mainframe category.

Revenue from enterprise solutions was $478 million, up 12 percent from one year earlier, while services revenue were up 17 percent to $103 million.

CA said about 8 percentage points of its growth came from existing products and 2 percentage points came from products the vendor has acquired in the last year.

For all of fiscal 2012 CA expects 6 percent revenue growth (in constant currency) to about $4.8 billion.