CA Sales Up But Earnings Down Due To Restructuring Charges


For fiscal year ended March 31, CA, Islandia, N.Y., reported $121 million in income, down from $160 million in 2006, after taking $79 million in charges related to its restructuring.

CEO John Swainson said a stronger-than-expected 2007 second-half performance was the result of the company refreshing nearly of its product lines, fostering a culture that focuses on results and customers recommitting to CA. Swainson also said CA planned an "accelerated repurchase" of up to $500 million of its common stock.

Revenue for the fourth quarter was $1 billion, up 7 percent from the prior-year period. For the full year, revenue was up 5 percent over fiscal 2006, with total revenues for 2007 reported at $3.9 billion.

CA also reported an 11 percent jump in subscription revenue to $793 million in the fourth quarter over 2006, which represented 79 percent of the company's revenue. For the year, subscription revenue increased by 8 percent to $3.1 billion, or 78 percent of total revenue.

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Product and service bookings declined in the fourth quarter by 5 percent compared to the same period in 2006, but for the year CA reported an increase in those categories of 16 percent to $3.4 billion.

The company attributed the decrease in fourth quarter 2007 bookings year-over-year to strong bookings in the third quarter, which it said decreased the number of contracts that were available for renewal in the fourth quarter.

CA projected fiscal 2008 revenue in the territory of $4.05 billion to $4.1 billion, or 3 percent to 4 percent growth, earnings per share of between 75 cents and 79 cents and full-year cash flow from operations in the neighborhood of $1.05 billion to $1.1 billion.

In an internal CA blog post that was attained from the company by CRN, Swainson addressed Monday's dismissal of pending charges against the company relating to the accounting scandal that resulted last November in former CEO Sanjay Kumar being sentenced to a 12-year prison term.

"What does the end of the [Deferred Prosecution Agreement] mean for CA? Well, apart from lifting a formal threat of prosecution from the company, very little. Over two years ago, we started to make the changes necessary to completely change the way we did business ... from our Code of Conduct to the way our management system works to changing the culture of the company. We are not the same company we were before ... we have come through a very difficult process, and become stronger and more determined as a result. We have a stronger and better management team and set of management processes," Swainson wrote.

Alan Weinberger, chairman and CEO of the ASCII Group, said his consortium of 1,500 resellers has "noticed a great change in the company" since new management took over two years ago.

"They are much easier to deal with and very ethical in all of their actions with us and our VARs. They attend our monthly meetings around the U.S. and their products are now well received. We are doing over $30 million with CA this period," he said.

Before the management changeover, the combination of "products that weren't considered best-of-breed" and the accounting scandal was "like a double whammy" for resellers, Weinberger said.

CA shares closed at $27.84 Wednesday, down from $28.13 the previous day.