Shares of

Computer Associates

(CA) - Get Report

climbed Wednesday, a day after the software maker reported second-quarter earnings that beat Wall Street estimates and raised earnings guidance for the full fiscal year.

Shares of the world's fourth-largest software maker rose $2, or 16.5%, to $14.10 in heavy trading.

On Tuesday, Computer Associates

reported second-quarter pro forma net income excluding charges of 4 cents a share, compared to a pro forma net loss of 16 cents a share a year earlier and pro forma net income of 2 cents a share in the first quarter. That exceeded the company's guidance and consensus earnings estimate of 2 cents a share gathered by Thomson Financial/First Call.

Islandia, N.Y.-based Computer Associates stuck by revenue guidance for the full 2003 fiscal year, which projects revenue to range from $3.1 billion to $3.2 billion. CA raised earnings guidance to 14 cents to 16 cents a share from 10 cents to 13 cents a share, as a result of an acceleration of cost savings.

Analysts responded to the results by raising estimates but maintained their hold or neutral ratings in part because an investigation by the

Securities and Exchange Commission

into CA's accounting practices continues to hang over the company and its stock.

"I think you're seeing stabilization in deferred revenue and earnings growth on tight financial controls," said Merrill Lynch analyst Peter Goldmacher, who maintained his neutral rating on CA. "Relative to the

software group, CA had a good quarter." Goldmacher's firm intends to seek or expects to receive investment banking compensation from CA in the next three months.

In a note Wednesday, Goldmacher noted that total deferred revenue -- a key measure of revenue that will be recognized in future quarters -- rose 1% sequentially, to $3.3 billion. "While we perceive this relative stability as a modest positive, only meaningful growth in this metric would enable us to become more positive on CA's longer-term growth prospects," he wrote.

Goldmacher raised his earnings estimate for fiscal year 2003, which ends in March, to 16 cents from 13 cents a share and his earnings estimate for fiscal-year 2004 to 32 cents from 27 cents.

Deutsche Bank Securities analyst Richard Zandi was less positive, although he also raised his earnings estimate for fiscal-year 2003 to 15 cents from 13 cents a share. He reduced his revenue estimate for fiscal-year 2003 to $3.15 billion from $3.17 billion.

"Overall we would characterize F2Q03 as treading water," Zandi wrote in a note Wednesday. "Many of the key financial metrics ... indicate that CA is continuing to experience significant stress." Zandi has a hold rating on Computer Associates and his firm has done banking business with CA.

Zandi also cited the marginal increase in total deferred revenue as well as a decline in head count by 2,200 compared to a year ago, among other metrics.