--Management plans to cut 1,200 positions
--Jobs will be backfilled to focus on priorities
--Company issues downbeat guidance downbeat
(Adds CEO comments, company background.)
By Drew FitzGerald
CA Inc. (CA) Chief Executive Mike Gregoire vowed to expand his
company's customer base after the information-technology company
reported its fourth straight quarterly sales decline and warned of
continuing weakness through the rest of its fiscal year.
The Islandia, N.Y., software maker also said it will cut about
1,200 jobs and consolidate development sites to focus on
higher-priority products and streamline its sales force, though CA
said it will "backfill" many of those positions in other areas. The
company has about 13,600 employees.
Lower expenses helped the company boost its fiscal
fourth-quarter earnings 15%, yet Mr. Gregoire said the company will
need to do better at controlling costs in the future by curbing
less productive research-and-development work.
"It's great to be experimenting, but that experimentation needs
to be done in the context of a strategy," Mr. Gregoire told
investors at the company's annual update in New York.
Shares slid 4.9% to $26.40 in after-hours trading as the company
gave a downbeat earnings outlook for the new year, warning its
focus on more frequent software updates would change how costs are
recognized.
The company projected adjusted earnings for the fiscal year
ending next March of between $2.35 and $2.43 a share with $4.43
billion to $4.52 billion of revenue, a decline of 2% to 4%.
Analysts surveyed by Thomson Reuters were expecting a profit of
$2.53 a share and predicted revenue would grow to about $4.67
billion.
CA makes a wide array of software for mainframe computer systems
and newer hardware, an industry that has faced serious headwinds in
recent months. The company has blamed challenges in its sales force
along with broader macroeconomic malaise for weakening earnings
estimates, though Mr. Gregoire said the company also needed to do a
better job marketing.
To that end, CA expects to incur a $150 million charge this
fiscal year to rebalance its resources and attract new customers.
About $100 million allocated to its sales force will move to
marketing, Mr. Gregoire said, because existing methods aren't
attracting enough new business.
For the quarter ended March 31, CA reported a profit of $242
million, or 53 cents a share, up from $211 million, or 45 cents a
share, a year earlier. Excluding stock-based compensation costs and
other items, earnings from continuing operations grew to 68 cents a
share from 56 cents. Revenue declined 3.1% to $1.15 billion.
Analysts polled by Thomson Reuters were looking for a per-share
profit of 55 cents on revenue of $1.14 billion.
Total expenses declined 1.1% to $877 million, while income-tax
expenses dropped 73%.
--Debbie Cai contributed to this report.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com
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