CA Surpasses Estimates in 4Q - Analyst Blog
14 Mai 2012 - 3:24PM
Zacks
CA Inc. (CA) reported fourth quarter 2012
adjusted earnings per share (EPS) of 52 cents, surpassing the Zacks
Consensus Estimate of 49 cents.
Revenue
Total revenue in the reported quarter came in at $1.2 billion,
up 5.3% from $1.1 billion in the year-ago quarter. The company
witnessed improvement in demand for its services and learning,
virtualization and service automation, security and mainframe
solutions, offset to a considerable extent by the softness in
mainframe capacity and service assurance. About 4 percentage points
of revenue growth was driven by constant currency while 3
percentage points was due to organic products.
Moreover, the company also generated 2 percentage points from
recent acquisitions. Region wise, 63.0% of the company’s revenue in
the fourth quarter came from North America while the remaining
37.0% came from International operations.
Revenue Segments
As per revenue segments,Mainframe Solutions
revenue was $629 million, up 2.0% year over year.
Enterprise Solutions revenue was $466 million, up
10.0% year over year. Services revenue was $93
million, up 13.0% compared with the year-ago quarter.
Bookings
The company witnessed total bookings worth $4.663 billion, down
5% year over year. Bookings improved as a result of renewals, which
generally impacted revenues by $500 million with a large IT
outsourcer.
Moreover, bookings for North America were $2.859 billion, down
12.0% in constant currency. Bookings for North America for fiscal
year 2012 were positively impacted by the large contract renewal.
The company reported International bookings of $1.804 billion, up
9.0% compared with the year-ago period.
Operating Results
Income from continuing operation was $211.0 million, up 12.8%
from $187.0 million in the year-ago quarter. Income from continuing
operations increased as revenue growth was almost in line with the
operating expense growth. Moreover, the company also exercised
good fiscal discipline and cost control.
Net income on a GAAP basis in the reported quarter was 45 cents
per share versus 37 cents per share in the year-ago quarter.
Excluding special items, such as software amortization, intangible
amortization, restructuring and other and hedging gains/losses,
non-GAAP net income in the fourth quarter stood at 52 cents per
share versus 39 cents in the prior-year quarter.
Balance Sheet and Cash Flow
CA Inc. generated cash flow from continuing operations of $776.0
million compared with $634.0 million in the year-ago quarter. Cash,
cash equivalents and marketable securities were $2.7 billion versus
$2.5 billion in the previous quarter.
Guidance
For fiscal 2013, the company expects total revenue to grow in
the range of 2% to 4%. This translates to reported revenue of $4.85
billion to $4.95 billion. The company reported GAAP diluted
earnings per share growth in the range of 10.0% to 14.0%. This
translates to GAAP reported diluted earnings per share of $2.07 to
$2.14.
Non-GAAP diluted earnings per share are expected in the range of
$2.45 to $2.53. Cash flow from continuing operations is expected to
be in the range of $1.56 billion to $1.59 billion.
Our Take
CA Inc. posted decent fourth quarter results exceeding the
earnings estimates. Revenue also improved on a year-over-year as
the company witnessed improvement in demand for its services.
However, the product demand trend was moderate in the reported
quarter. This apart, the company has implemented some fiscal
discipline to improve its operating performance.
We believe that the company provided decent fiscal 2013
guidance. On the other hand, we are apprehensive about intense
competition in the software & cloud computing space from big
players such as IBM Corp. (IBM) and
Hewlett-Packard Company (HPQ). In addition, its
high debt balance, reduction in tech spending by government
agencies and European exposure may pose some challenges going
forward.
The company has a short-term Zacks #3 Rank. (Hold rating).
CA INC (CA): Free Stock Analysis Report
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