Jan 24, 2006 (12:01 PM EST)
CA Earnings Rise Amid Restructuring
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CA nearly doubled earnings in its third quarter thanks in part to cost cuts and a few large contracts, the Islandia, N.Y., vendor said late Tuesday.
The maker of IT management software posted earnings of $56 million during the quarter, or 9 cents a share, on revenue of $967 million. For the same quarter a year ago, CA reported $31 million, or 5 cents a share, on revenue of $917 million.
John Swainson, president and CEO, said he was pleased by the progress CA is making in changing from primarily a mainframe management software vendor to one that sells IT management solutions for today's distributed enterprise IT environments.
"We are continuing to change the DNA of the company," he said.
CA is still in a restructuring mode, and cost cuts by the vendor drove operating expenses for the quarter down by $46 million compared to the same quarter a year ago, the company said.
During the third quarter, two large contracts with an outsourcer were paid in full instead of being paid in annual installments over the life of the contracts. The value of these two contracts contributed an incremental $59 million more to the quarter than if they had been invoiced in annual installments, the company said.
The process of adapting to a new sales structure that emphasizes selling new CA products instead of re-licensing older ones placed a strain on CA's billings, said CFO Jeff Clarke, who said mainframe billings were down 5 percent for the quarter.