Dividend.com: Cautious on CA

CA Profit Beats View, but Revenue Falls 5%

IT management software company CA (CA Quote), formerly known as Computer Associates, said late Wednesday that its fiscal fourth-quarter adjusted profit beat analyst expectations.

The Islandia, New York-based company reported fiscal fourth-quarter net income of $72 million, or 13 cents per share, compared with $71 million, or 13 cents per share, in the year-ago period. Excluding special one-time items, the company earned 31 cents per share.

Revenue dropped 5% from the year-ago period to $1.04 billion.

On average, Wall Street analysts expected earnings of 29 cents per share on revenue of $1.03 billion.

CA's Q4 Highlights

• Subscription and maintenance revenue fell 4% to $913 million

• Professional services revenue dropped 18% to $84 million

• Software fees and other revenue jumped almost 23% to $38 million

• Expenses fell almost 9% to $855 million, helped by lower selling and marketing expenses

For the full fiscal year 2009, CA said it earned $694 million, or $1.29 per share, compared with $500 million, or 93 cents per share, in fiscal 2008. Total revenue was $4.27 billion, nearly flat with $4.28 billion recorded in the previous year.

CA said it expects a fiscal 2010 profit of $1.51 to $1.61 per share, excluding items, on revenue of $4.16 billion to $4.24 billion. On average, Wall Street analysts expect a profit of $1.58 per share on revenue of $4.29 billion.

CA shares rose 71 cents, or +4.1%, in morning trading Thursday.

We have avoided shares of CA since our June coverage began, when the stock was trading at $24.94. The company has a dividend yield of .92%, based on last night's closing stock price of $17.32. The stock has technical support in the $14-$16 price area. If the shares can firm up, we see overhead resistance around the $20-$21 levels. We would remain on the sidelines for now.