Is CA Back On Track? - InformationWeek

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11/2/2007
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Is CA Back On Track?

In the last quarter, the systems management software company signed 16 major license agreements of more than $10 million apiece, totaling $334 million.

Systems management software company CA might finally be out of the woods financially. On Monday, the company beat Wall Street's expectations with second quarter earnings and increased guidance for fiscal 2008.

Revenue was up 8% from the same period a year ago to $1.07 billion, beating analyst expectations of $1.01 billion, and earnings were $137 billion, a 154% increase from earnings of $54 million in the second quarter of fiscal 2007. That translated to earnings of 32 cents per share, which beat analyst expectations of 26 cents per share.

"I think we've made another significant advance in transforming CA," CA CEO John Swainson said in a conference call with investors. "We're a stronger, leaner company, and we're taking aim to be a more competitive force in the industry."

CA has long been addled with problems brought on by a $2.2 billion accounting fraud scandal that left the company and organization struggling for the last few years to get back on track and repeatedly restating earnings. Charges against the company were dropped earlier this year.

Former CEO Sanjay Kumar is in prison for up to 12 years and Swainson has overseen a massive restructuring of the company's sales and governance teams. The company's cut jobs and is also in the midst of a major implementation of an SAP ERP system.

In the last quarter, CA signed 16 major license agreements of more than $10 million apiece, totaling $334 million. That's almost triple the number and amount of similar contract last year, and bookings overall were up 46%. On the conference call, CA executives repeatedly referred to their restructuring of the company's sales organization as one of the main catalysts for its success.

Now, CA needs to prove that it can maintain growth. To do so, it has to prove to customers that it isn't the same CA that had customers complain for years that serial acquisitions led to a lack of cohesiveness across its product lines.

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