Updated from 6:54 p.m. EST
delivered an in-line third quarter, but mainframe software billings were disappointing and earnings guidance for the current quarter was a bit shy of expectations.
In recent after-hours trading on Instinet, shares were down 98 cents, or 3.4%, to $27.90.
The mainframe and systems software giant grew revenue by 5%, while operating EPS jumped by 33%, CA (formerly Computer Associates) reported after the close of trading on Tuesday.
CA earned a profit of 9 cents a share, or $56 million, from continuing operations on sales of $967 million. Excluding charges for restructuring and other items, CA posted a profit of 24 cents a share, or $59 million.
The company took a charge of 3 cents a share for the cost of options. If revenue from the now sold
unit is included, the company's net income was 10 cents a share.
Analysts polled by Thomson First Call were looking for a profit of 24 cents on sales of $967 million excluding charges.
Looking to the current, or fourth quarter, the company expects to earn a profit of 23 cents or 24 cents a share on sales ranging from $975 million to $1 billion. Analysts were forecasting a profit of 25 cents on sales of a bit over $1 billion. The one-penny difference is attributable to the pending $375 million acquisition of
, announced earlier this month.
Billings in the third quarter were $1.29 billion, down 1% from the prior year, but up 2% when currency fluctuations are excluded. Mainframe software billings, a staple of CA, were off 5%, although the company had expected them to be flat. Mainframe software typically generates half of the Islandia, N.Y. company's total revenue.
Chief Operating Officer Jeff Clarke said during a call with analysts that his company needs to do a better job updating mainframe software and managing the sales team that sells it. Both tasks, he said, have been somewhat neglected but CA has instituted a five-part program to fix the problems, including new products later this calendar year, and support for newer mainframe hardware .
Clarke said that revenue from
new System z9 line of mainframe computers has not yet flowed to CA's top line.
CA now expects adjusted cash flow from continuing operations to rise 12% to 15% from last year -- up from earlier guidance calling for the measure to rise 10%.
And in a sign that CA and its new management team appear to have reached a state of relative normalcy, a post-announcement call with analysts was notably absent references to prior accounting scandals, indicted executives and explanations of why certain results needed to be restated.
However, regulators will take a hard look at CA by the end of September to be sure that a number of reforms agreed to as part of a so-called deferred prosecution agreement, have gone into effect. If a court-appointed observer is not convinced of the company's compliance, it could face charges of fraud and obstruction of justice.