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CA Sails Past Estimates

Revenue grows 8%.

Updated from 5:33 p.m. EDT


(CA) - Get CA, Inc. Report

blew away first-quarter earnings estimates and boosted expectations for full-year results.

The business software maker posted revenue of $1.025 billion, up 8% year on year, when revenue was $949 million. Analysts polled by Thomson Financial were expecting revenue of $996.1 million.

EPS was 24 cents on net income of $129 million, vs. 6 cents on $35 million in the prior year's period.

Excluding items, EPS was 29 cents. Analysts were expecting 23 cents a share.

The stock was up 86 cents, or 3.4%, to $26 in after-hours trading.

Deferred revenue declined 3.7% sequentially, to $1.73 billion, from $1.79 billion in the previous quarter.

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Bookings increased 48% to $834 million, driven by an increase in large contracts. CA inked 10 license agreements greater than $10 million each, totaling $202 million, CFO Nancy Cooper said on a conference call.

The company is seeing growth in sales of its IT governance, management and security software for both mainframes and distributed computing, CEO John Swainson said.

Because of a slow bookings start in the prior year, the company expects relatively easy year-over-year bookings comparisons for the next quarter, but less so for the rest of fiscal 2008. Cash flow from operations, which was negative in the quarter, was better than expected because of the timing of about $50 million in tax payments, to be made later in the year.

The company reiterated full-year guidance for revenue ranging from $4.05 billion to $4.1 billion. CA raised the high end of its EPS guidance, before items, to 94 cents to $1, from previous guidance of 94 to 98 cents. Analysts were expecting revenue of $4.08 billion and EPS of 97 cents.

Operating expenses declined $34 million, or 4% year over year, Cooper said. Operating margin, excluding items, was 25%, an 8% improvement over the same quarter of the previous year.

Asked if businesses have pulled back on IT spending, Swainson said, CA hasn't seen any decline in investment. "CIOs are still spending money."

"Security remains important. ... They are making sure they get automation into their governance processes," he added.

Virtualization does not pose a threat to CA's mainframe business, Swainson said. "But it will lead to efficiency in the distributed environment."

"The opportunity for us is to manage

server efficiency in the overall enterprise environment."