Computer Associates Edges Estimates

But third-quarter sales guidance comes in light.
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Updated from 4:20 p.m. EDT

Computer Associates

(CA) - Get Report

bettered its recently revised targets for the second quarter but sales guidance for the third quarter was light, the software company said after the closing bell Wednesday.

Wall Street's reaction to the news was muted since CA had preannounced second-quarter results earlier in the month. In recent after-hours trading, shares of the company were up 62 cents, or 2.3%, to $27.60; the stock closed regular trading with a gain of 18 cents to $26.98.

The company posted a second-quarter loss of $94 million, or 16 cents a share. A year ago, the company lost $90 million, or 16 cents a share, according to generally accepted accounting principles.

The loss in the just-closed quarter includes a charge of $218 million, or 24 cents a share, related to establishing a restitution fund. The fund was set up in the wake of a $2 billion accounting scandal that led to the departure of former CEO Sanjay Kumar and much of the company's management team. Kumar and others have been charged with fraud.

Revenue rose to $855 million, a 6% year-over-year increase, and $5 million greater than the high end of guidance the company issued in early October.

On a pro forma basis, the company earned 22 cents a share, including a 4-cents-a-share tax benefit. Analysts polled by Thomson First Call were expecting a profit of 16 cents a share before items on sales of $843.2 million.

Currency fluctuations added about 3% to the top line.

Bookings increased by 70% to $490 million during the quarter.

The company has cash and short time assets of $2.25 billion, plus a balance of $4.3 billion in deferred revenue sitting on the balance sheet.

Looking forward, the company told investors to expect revenue in the third quarter to range from $850 million to $865 million; Wall Street was expecting $872 million. Pro forma earnings will be 18 cents or 19 cents a share; analysts were projecting 18 cents.

The company also raised its guidance for the full year (fiscal 2005), saying EPS will range from 79 cents to 82 cents, compared with earlier guidance of 70 cents to 75 cents and Wall Street's expectations of a 74-cent-a-share profit.

Acting CEO Ken Cron said the restitution payments are "substantial, but fair," and said the company will submit a list of five suggested candidates to monitor CA's compliance with the government settlement. He said personnel searches for a permanent CFO and CEO are continuing, but gave no timetable for completion.