(CA) CA Incorporated Delivers Decent Numbers

January 30th, 2010

CA Inc. (CA) reported third quarter 2010 EPS of 43 cents, exceeding the Zacks Consensus Estimate of 42 cents.

Revenue

The company reported third quarter 2010 revenue of $1.13 billion, up 8.2% from $1.04 billion reported in the year-ago quarter. This is attributed to revenue growth across all its business segments except Professional service, along with revenue growth in North America and Other International.

In terms of business segments, Subscription and Maintenance revenue for the third quarter stood at $1.0 billion, up 8.8% from $919.0 million reported in the year-ago quarter. Professional Services revenue was $74.0 million, down 14.9% from $87.0 million reported in the same quarter last year. This decline has negatively affected the year-over-year revenue growth by one percentage point.

Software Fees and Other generated revenues of $54.0 million were up 50.0% from $36.0 million reported in the year-ago quarter. The growth in software revenue can be attributed to a strong quarter in application performance management and revenue from NetQoS.

On the basis of geographic segments, North America generated revenue of $655.0 million, up 7.7% from $608.0 million reported in the year-ago quarter, while International revenue was $473.0 million, down 8.9% from $434.0 million reported in the year-ago quarter.

Bookings

Total bookings in the third quarter were $1.37 billion, up 10.0%, compared to the prior-year period. During the third quarter, the company signed 16 license agreements with aggregate values greater than $10.0 million for a total of $514.0 million, compared with 18 license agreements totaling $471.0 million in the third quarter of 2009.

Operating Results

On a GAAP basis, operating income for the third quarter stood at $351.0 million (32% of revenue), up 14.0% from $309.0 million (31.1% of revenue) reported in the year-ago quarter. Excluding special items — purchased software amortization, intangibles amortization, hedging losses and gains, restructuring & other costs — the non-GAAP operating income for the quarter stood at $374.0 million (33.0% of revenue), up 11.0% from $338.0 million (32.0% of revenue) reported in the year-ago quarter. Operating income increased, as total expenses increased at a lower rate than revenue.

Net Income on a GAAP basis for the third quarter of 2010 was $257.0 million or $0.49 per share, versus a net income of $208.0 million or $0.39 per share reported in the year-ago quarter. Excluding special items, non-GAAP net income in the third quarter was $233.0 million or $0.43 per share, remaining flat compared to the year-ago quarter.

Balance Sheet and Cash Flow

The company reported $342.0 million of cash from operating activities, in the recently concluded quarter, compared to $292.0 million reported in the year ago quarter. Days Sales Outstanding (DSO) remained flat compared to the year ago quarter. Cash and cash equivalents at the end of the third quarter was $2.6 billion, while long-term debt (including the current portion) was $1.54 billion. During the quarter the company repaid approximately $636.0 million of debt.

Guidance

For the fiscal year 2010, management expects total revenue growth in the range of 2% to 4% (at current exchange rates), translating to a revenue of $4.30 billion to $4.40 billion. GAAP diluted earnings per share are expected to be in the range of 18% to 26%, which translates to diluted earnings per share of $1.46 to $1.57, while non-GAAP diluted earnings per share are expected to be in the range of $1.60 to $1.71.

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(CA) CA Incorporated Delivers Decent Numbers

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