Updated from 5:09 p.m. EST
SAN FRANCISCO --
After years in the shadows as it
recovered from a fraud debacle, the late, great business- and financial-management software company is back in good standing with investors and plans to retake its high profile this year.
CA's third-quarter profit shot higher, and the company lifted guidance Thursday for the full year.
Shares were up 89 cents, or 4%, to $22.89 in after-hours trading.
The Islandia, N.Y. company had revenue of $1.1 billion, up 9.8% from $1 billion in the same quarter of the prior year. Analysts polled by Thomson Financial were expecting revenue of $1.04 billion.
The bottom line grew 226%, to $163 million, or 31 cents a share. In the year ago period, net income was $50 million, or 9 cents a share. The company attributed its performance to higher revenue, active expense control, and a decrease in amortization and restructuring costs.
Excluding items, EPS was 36 cents. Analysts were looking for 25 cents a share.
CA boosted its fiscal 2008 revenue guidance by approximately 2% to a range of $4.25 billion to $4.28 billion, implying fourth-quarter revenue ranging from $1.06 billion to $1.09 billion. Analysts were expecting fourth-quarter revenue of $1.05 billion. The company's prior guidance was for full-year revenue of $4.15 billion to $4.2 billion. Analysts were expecting $4.19 billion.
CA said full-year EPS will be $1.22 to $1.26, implying fourth-quarter earnings of 25 cents to 29 cents a share. Analysts were calling for 24 cents a share.
Under the new management, CA has emerged from an infamous period during which investors had lost faith in the stock. Under the direction of CEO John Swainson, CA stepped out of the spotlight during much of its restructuring period.
With performance improving, the company will be back in 2008, with a higher profile at industry events. "You can expect to hear and see more from us than you have in recent years, Swainson said on the conference call. "While the economy seems to be moving into an uncertain economic environment ... our portfolio will put us in an advantageous position."
Total bookings were down 21% year over year to $1.2 billion. However, bookings are already up 9% in the current quarter, and CA expects to end the fiscal year with full-year bookings growth in the mid-teens, CFO Nancy Cooper said. Growth in bookings will translate into improved billings, she added.
Swainson attributed the bookings growth to the productivity of the sales force.
Operating cash flow declined 60% year over year to $233 million in the third quarter, compared to $587 million in the prior year. CA said the drop was due to unusually strong bookings in the prior year, when the company was catching up from a weak first half of the fiscal year.
For the first three quarters, CA recorded $413 million in operating cash flow, compared to $547 million for the same period of the prior year.
Cooper reiterated her outlook for cash flow growth of 7% to 10% in three to five years.
Cooper said three measures will drive cash flow growth. First, CA boosted its collectibles by $100 million year over year. "We entered this year with a decline ... on the amount to be collected. We're coming out of a hole." Higher collectibles, together with a 6% increase in deferred revenue, will lead to more top-line growth, Cooper said.
Second, controlling expenses gave the company a 27% operating margin in the most recent quarter, a 6-percentage-point improvement year over year. Finally, CA will manage its cash taxes more tightly going forward. "Those three things are the foundation for long-term improvements to cash flow," Cooper said.