CA Beats Expectations, Sales Dip

Oct.27.09 | About: CA Inc. (CA)

CA Inc. (CA) reported second quarter 2010 EPS of 42 cents, exceeding the Zacks Consensus Estimate of 40 cents.

Revenue
The company reported revenue of $1.07 billion, down 3.0% from $1.10 billion reported in the year ago quarter. This can be attributed to revenue decline across all of its business and geographic segments, except North America.

In terms of business segments, Subscription and Maintenance revenue for the quarter stood at $973 million, almost flat compared to $975 million reported in the year-ago quarter. Professional Services revenue was $71 million, down 24% from $94 million reported in the same quarter last year. Software Fees and Other generated revenues of $28 million, down 26% from $38 million reported in the year-ago quarter.

On the basis of geographic segments, North America generated revenue of $628 million, up 2% from $615 million reported in the year ago quarter. International revenue was $444 million, down 10% from $492 million reported in the year ago quarter.

Bookings
Total bookings in the quarter were $947 million, down 37% compared to the prior year period. During the quarter, the company signed 18 license agreements with aggregate value greater than $10 million for a total of $366 million, compared with 17 license agreements totaling $892 million in the second quarter of 2009.

Operating Results
On a GAAP basis, operating income stood at $339 million (32% of revenue), up 3% from $330 million (30% of revenue) reported in the year ago quarter. Excluding special items such as purchased software amortization, intangibles amortization, hedging losses and gains, the non-GAAP operating income for the quarter stood at $367 million (34% of revenue), up 6% from $345 million (31% of revenue) reported in the year-ago quarter. Operating income increased as total expenses declined 7% on a year over year basis.

GAAP net income for the quarter was $218 million or $0.41 per share, versus net income of $202 million or $0.39 per share reported in the year-ago quarter. Excluding special items, non-GAAP net income was $232 million or 42 cents per share, compared to $219 million or 40 cents per share reported in the year-ago quarter.

Balance Sheet and Cash Flow
CA Inc. reported $120 million cash from operating activities in the recently concluded quarter, compared to $218 million reported in the year ago quarter. Cash and cash equivalents at the end of the reported quarter was $3.02 billion, while long term debt (including the current portion) was $1.93 billion.

Guidance
For the fiscal year 2010, management expects total revenue growth in the range of 2% to 4%, rather than at the high end of the range, as previously forecasted. At current exchange rates, this translates to reported revenue of $4.30 billion to $4.40 billion. GAAP diluted earnings per share are expected to be in the range of 18% to 27%, which translates to reported diluted earnings per share of $1.47 to $1.58, while non-GAAP diluted earnings per share are expected to be in the range of $1.60 to $1.71.