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$15.07 -0.99 (-6.16%)
12/4/2008 4:00 PM

CA, Inc. (CA)

CAPS Rating:
**

An independent providers of information technology management software. It develops, markets, delivers and licenses software products and services that allow organizations to run, manage and automate aspects of their computing environments.

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Avatar NetscribeSoftwre (96.95) Submitted: 1/09/07 7:34 AM : Underperform Start Price: $24.61 CA Score: -0.86

CA, Inc. began operations in 1976, and is now one of the world’s largest providers of information technology enabled management software. The company is an independent software vendor and develops and licenses software products that enable computer hardware platforms and operating systems to be sold by vendors. The company with around $4 billion in annual revenue mainly divides it product development into five business units, which are Enterprise Systems Management, Security Management, Storage Management, Business Service Optimization, and the CA Products Group. CA has been involved in a huge acquisition spree with around 50 acquisitions since inception including the recently acquired Cybermation and MDY Group International.


The company is facing stagnant performance due to declining mainframe market. The revenue rose by mere 4% during the six months ending September. However the income is seeing a huge decline by over 35% mainly due to increase expenses and rise in product development cost. The repurchase of $1 billion of stocks have come as the only respite for the stockholders.

CA’s lackluster performances have lead to a management turnaround, and a newfound focus on restructuring activity. The product line of over thousand offerings that company has garnered with help of the acquisitions, is now acting as a main hurdle. Further, the number of scams and higher attrition rate are making things worse in restructuring. In 2007 the company is not expected to see a major turnaround, as the drop of around 20% in bookings due to declining customer license, will take its toll. Moreover, considering the declining cash from operations that could slow down any new acquisitions, as well the postponement of company’s share repurchase plan, it is unlikely that any inorganic growth will be achieved in the year, and thus makes it very difficult for CA to beat the benchmark returns in 2007.

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Avatar NetscribeSoftwre (96.95) Submitted: 5/28/07 6:12 AM

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CA Inc., one of the world's largest management software developers registered a relatively better performance. For the fourth quarter ended March 31 its revenues observed an improvement of 6.7% to $1 billion, as a result of healthy growth in subscription revenue and professional services revenue. However the Maintenance and Software revenues continued their disappointing trend. The company’s bottom-line was the major boosted by narrowed losses falling to $20 million from $39 million a year ago, due to healthy trend in top-line and rise in operating and net margins.

Subscription revenues now account for 79% of company’s total revenues, which can be attributed to the CA’s changed subscription based business model. This transition is likely to continue till end of the fiscal 2008, while company is currently facing major restructuring charges related to severance costs and closure of facilities, which during the quarter scaled to $100 million, from $22 million a year ago.

Going ahead, one would still recommend being cautious on CA at this point of time as there is no major evidence that revenues have stabilized, while the current margin improvement can also backtrack if restructuring expenses continue to mount. The company’s outlook given for the fiscal 2008 where company expects revenues to be in the range of $4.05 billion to $4.10 billion, a rise of mere 3% to 4% over the current fiscal performance also disappoints, falling below Wall streets recommendations. The free cash flow which is projected to be around the same levels as the current quarter, also leaves much to desire, making it better for an investor to give CA a pass at this point of time.

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