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Information technology (IT) and management software developer CA Inc. (CA) has recently entered into a technical collaboration agreement with Dimension Data Asia Pacific (formerly known as Datacraft Asia) to facilitate the process of enterprise cloud adoption throughout the Asia Pacific.

Dimension Data has developed Operations-as-a-Service (OaaS) offerings, utilizing CA Technologies’ virtualization management, service automation, capacity management and service assurance solutions for effectively operating in the cloud environment.

The collaboration is expected to work in favor of Dimension Data’s clients in the Asia-Pacific region. CA Technologies’ virtualization management, service automation and capacity management solutions will help Dimension Data's clients accelerate IT and business service delivery while simultaneously minimizing costs and risks.

This includes “CA Automation Suite for Data Centers,” which enables organizations to simplify, control and dynamically automate service delivery across heterogeneous physical, virtual and cloud environments. Moreover, “CA Capacity Manager” will be beneficial for Dimension Data clients.

Moreover, Dimension Data's OaaS offerings enable clients to gain control over service delivery and also enhance the performance of IT and business services across private, public and hybrid clouds. Hence, the partnership is expected to be accretive for both the companies and will help them drive significant market share in the cloud computing space.

Cloud computing is becoming increasingly popular and major players in the tech industry are investing heavily in this space. Moreover, the combined solution offered by the collaboration ensures proper planning and implementation as well as management of cloud solutions, which can be integrated with existing IT infrastructure. The joint venture will also help CA to expand in the markets where Dimension Data is an established player.

CA is slowly tapping the huge opportunity prevalent in the virtualization/cloud computing space, which could help accelerate its growth over the next 2-3 years. Through the recent acquisition of the cloud computing company Oblicore, CA acquired additional technical know-how that could boost its cloud computing business. Therefore, the company appears to be set to benefit from the huge potential of the virtualization/cloud computing domain in 2011.

As per a study conducted by Market Research Media, the U.S. government’s spending on cloud computing is about to boom, growing at a CAGR of 40.0% from 2010 to 2015, crossing the $7.0 billion mark in 2015. Cloud computing leads to increased service and elevated security requirements for the companies that use them and CA's product portfolio is well positioned to benefit.

CA Inc. posted modest fourth quarter results.  The product demand trend witnessed in the quarter was also encouraging. Keeping in mind the quarter’s revenue backlog, we find the fiscal 2012 guidance a bit conservative. We believe CA is focused on enhancing shareholders’ value through share buybacks and dividend increases.

On the other hand, intense competition in the software & cloud computing space from big players, such as International Business Machines (IBM) and Hewlett-Packard Company (HPQ), high debt balance and European exposure are headwinds for the stock.

Currently, CA Inc. has a Zacks #3 Rank, implying a short-term Hold rating.

 
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