CA: Trouble Continues Despite Name and Management Changes

| About: CA Inc. (CA)

CA (NASDAQ:CA), the business software company f/k/a Computer Associates, has a long, long history of accounting problems and scandal, most recently culminating in a 12-year jail term for former CEO Sanjay Kumar. What’s amazing is that despite a name change, a series of management changes and a nearly ceaseless series of acquisitions, CA cannot seem to string together a few decent quarters in a row.

As I noted Thursday night, the company’s fiscal second quarter report yesterday featured a dramatic miss at the cash flow level, due to weaker-than-expected new bookings, among other troubles. On Friday, the stock swooned and the Street is disgusted. One reason the stock was down even more than suggested after hours is a suspension of the company’s buyback plan. Here’s a rundown:

  • Rob Owens, Pacific Crest: No reason to be involved with CA…Bookings, billings and cash flow miss the mark…Heading into the seasonally strongest period, we foresee a general uptick in business in the second half, but the September-quarter results make it evident that CA has significant work to do on restrucuring. Rating: Sector Perform.
  • John DiFucci, Bear Stearns: Another dismal quarter…Management backed away from its plan to repurchase an incremental $1 billion of shares by March 31. We believe the anticipated buyback was providing significant support for the stock, as fundamentals are clearly awry…we are optimistic [about] management’s vision for a unifed platform encompassing [network systems management], security and storage. The question that remains has more to do with execution that ever before, which will have to be measured over the next few years. We continue to rate CA shares Peer Perform.
  • Robert Stimson, W.R. Hambrecht: The quarter’s results continue to cast doubt on when management will be able to achieve a recovery in the fundamentals of the business…remain on the sidelines until a clearer recovery picture emerges.
  • Jason Maynard, Credit Suisse: The company continues to sturggle…We remain concerned that CA’s execution challenges are daunting, and are not inclined to recommend the shares until wethink business stabilizes.
  • Walter Pritchard, Cowen: Barring an unlikely topline up-turn, more significant cost cutting is all that would turn us more positive…the company needs to distill down the product lineto focus profitable stability at the expense of growth.