CA lower; EPS guidance, bookings overshadow FQ4 beat, new buyback

Though CA (CA -3.3%) beat FQ4 estimates, it's guiding for FY15 (ends March '15) EPS from continuing ops of $2.45-$2.52, below a $2.56 consensus. FY15 revenue guidance of $4.43B-$4.49B is in-line with a $4.47B consensus.

The systems management software vendor has also announced a new $1B buyback; it's good for buying 7.6% of shares at current levels. $167M was spent on buybacks in FQ4, and $505M in FY14.

While CA's revenue only fell 3% Y/Y in FQ4, bookings fell 15% to $1.24B thanks to a 21% drop in North American bookings to $768M; international bookings declined 1% to $473M. The company has been facing tough competition both from established vendors such as IBM, and upstarts such as ServiceNow.

Mainframe Solutions revenue fell 1% Y/Y to $613M, and had a 55% op. margin. Enterprise Solutions (includes server management) revenue fell 4%, and had a -2% op. margin.

In spite of the revenue drop, R&D spend rose 31% Y/Y to $159M, and G&A spend 17% to $118M. Sales/marketing spend fell 2% to $318M.

FQ4 results, PR

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Comments (3)
  • BullishonManagement
    , contributor
    Comments (812) | Send Message
    Not sure who posts this information.
    The GAAP results are impacted by 0.08/shr on the change from amortizing R&D expense to taking the expense when it occurs - a standard SaaS industry practice. And 0.07/shr for the restructuring - that accounts for 15/shr in GAAP EPS impact.


    The offset - 0.11/shr impairment of acquisitions that did not meet goals.


    GAAP also impacted by 13c/shr due to tax rate.. non-Gaap benefited 3c/share due to tax rate.. go figure.


    Actual expenses were up for consulting and marketing - rest were essentially flat (but no longer amortized) - so the above comment regarding G&A and R&D.. not an increase in expense but the shift of expense from amortized to non-amortized...


    Bookings were up 11% Year over Year..
    15 May 2014, 05:06 PM Reply Like
  • Eric Jhonsa
    , contributor
    Comments (1276) | Send Message
    Bookings were up 11% Y/Y for FY14, but down 15% Y/Y in FQ4.
    15 May 2014, 05:15 PM Reply Like
  • BullishonManagement
    , contributor
    Comments (812) | Send Message
    Eric - you do acknowledge that R&D and G&A did not actually go up in real cash expense - it's an accounting change that made it appear that way.
    Bookings have traditionally been very lumpy - you would have to understand the difference between net new bookings and renewed bookings to understand whether 15% or any other % is good or bad. I am trying to get my arms around the rational - other than a broad market sell off. A share buy back that takes 7% off the market has value, and a dividend has value - the revenue is a reflection of bookings - the big number you need to focus on is deferred revenue - that is an indication of business growth.
    15 May 2014, 07:06 PM Reply Like
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