CA Delivers Impressive 3Q - Analyst Blog
25 Gennaio 2012 - 4:26PM
Zacks
CA Inc. (CA) reported third quarter 2012
adjusted earnings per share (EPS) of 60 cents, well ahead of the
Zacks Consensus Estimate of 51 cents.
Revenue
Total revenue in the reported quarter came in at $1.26 billion,
up 10.4% from $1.14 billion in the year-ago quarter. Around 8
percentage points of this growth was organic, while the remaining
came from acquisitions. Moreover, the company also witnessed a
$20.0 million upside in perpetual sales associated with Enterprise
Solution products, including $10.0 million of products that were
eligible for upfront recognition during the quarter.
Subscription and Maintenance revenue crept up 3.3% year over
year to $1.00 billion. Professional Services revenue stood at
$103.0 million, up 17.0% year over year. Software Fees and Other
revenues shot up 87.8% to $154.0 million from $82.0 million a year
ago.
North America generated revenues of $791.0 million, up 15.3%
year over year while international revenue was $472 million, up
3.0% from the prior-year quarter.
Bookings
Total bookings in the third quarter were $1.284 billion, up 1.0%
year over year. One single license payment contributed 3
percentage points of growth in bookings in North America. Moreover,
the company renewed a total of 12 license agreements, each valuing
in excess of $10.0 million, for an aggregate contract value of
$452.0 million.
Operating Results
Income from continuing operation was $263.0 million, up 34.2%
from $196.0 million in the year-ago quarter. Income from continuing
operations increased as revenue growth exceeded the growth in
operating expense.
Net income on a GAAP basis in the reported quarter was 54 cents
per share versus 38 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 third quarter stood at 60 cents per
share versus 44 cents in the prior-year quarter.
Balance Sheet and Cash Flow
CA Inc. generated cash flow from continuing operations of $396.0
million compared with $190.0 million in the year-ago quarter. Cash,
cash equivalents and marketable securities were $2.539 billion
versus $2.292 billion in the previous quarter.
Guidance
For fiscal 2012, the company expects total revenue of about $4.8
billion. GAAP diluted earnings per share growth is expected in the
range of 11.0% to 13.0% in constant currency, compared with the
previous outlook of 6.0% to 9.0%. This translates to GAAP
diluted earnings per share of $1.86 to $1.90.
Non-GAAP diluted earnings per share growth have been raised to a
range of 11.0% to 13.0% in constant currency from the previous
outlook of 7.0% to 10.0% for the full year. This translates
to reported non-GAAP diluted earnings per share of $2.21 to
$2.25.
Cash flow from operations is expected to be in the range of
$1.44 billion to $1.47 billion for fiscal 2012.
Conclusion
CA Inc. posted decent third quarter results exceeding the
earnings estimates. Revenue also improved on a year-over-year
basis. However, the product demand trend was moderate in the
reported quarter. We believe that the company provided conservative
fiscal 2012 guidance.
On the other hand, we are apprehensive about intense competition
in the software & cloud computing space from big players such
as IBM (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 Zacks #4 Rank, implying a Sell rating in the
short term.
CA INC (CA): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
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