CA Doubles Profit

The company's earnings of 19 cents a share in the latest quarter meets analysts' estimates.
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Updated from 4:24 p.m. EST

Computer Associates

(CA) - Get Report

said its third-quarter profit doubled as revenue rose 9%.

The company said after the bell Tuesday that net income rose to $36 million, or 6 cents a share, from $18 million, or 3 cents a share, a year earlier.

Revenue rose to $911 million from $837 million a year earlier.

Excluding a charge, the company earned 19 cents a share in the latest quarter, meeting analysts' estimates. The company's revenue also bested Street estimates of $864 million.

New deferred subscription revenue was $898 million for the quarter, which includes $845 million in direct bookings and $53 million in indirect bookings. Total indirect bookings for the quarter were $84 million, a 17% year-over-year increase.

For the fourth quarter, the company expects operating earnings before items of 19 cents to 20 cents a share on revenue of $900 million to $920 million.

A Thomson First Call survey had expected the company to post earnings of 20 cents a share on revenue of $894.1 million.

CA shares traded up to $27.55 after hours; they closed the regular session at $27.25.

Earlier Tuesday, John Swainson, who will take the reins as CEO later in the year, said he is planning to reorganize CA along the lines of

IBM

(IBM) - Get Report

, where he worked for 26 years.

CA is organized along product lines; in the future, it will be organized by business units. "The business unit structure has proven itself an incredibly effective model in this industry and is a natural next step for CA," Swainson said in a memo to employees.

The heads of the units will have profit-and-loss responsibility for them, a move designed to push executives to concern themselves with the whole company and not just their product niche.

"The problem is brand managers become attached to their projects so there is less oversight from above on how to allocate resources," Nitsan Hargil, an analyst with Friedman, Billings, Ramsey told

Reuters

. "The change is many years overdue."

Interim CEO Ken Cron, who took over after former CEO Sanjay Kumar was forced out in the midst of a $2 billion accounting scandal, is bringing Swainson up to speed on the company to ensure that the transition is a smooth one.

CA did not give a time frame for the reorganization, but said it will make details public over the next few months.