Flash storage solutions provider
) has reached an agreement with Marlin Equity Partners (Marlin) to
divest its arcserve data protection business for an undisclosed
amount. The deal will allow CA management to focus better on the
core business, thereby improving execution.
Other terms and conditions of the deal were also not disclosed.
However, it is expected to close in second-quarter 2015. Further,
on completion of the deal, the arcserve data protection business
will form a part of CA's discontinued operations. As a result of
the announcement, CA restated its fiscal 2015 guidance in an 8K
filing and also mentioned that it will not be materially impacted
by this transaction.
For fiscal 2015, the company expects total revenue to decline in
the range of 2.0% to 1.0% to $4.43 to $4.49 billion in constant
currency. CA expects non-GAAP earnings per share from continuing
operations to decrease in the range of 21-19% to $2.45-$2.52 in
constant currency. The company also expects cash flow from
operations to increase in a range of 5% to 12% to $1.06 to $1.13
billion in constant currency.
CA arcserve data protection portfolio is an easy-to-use solution
providing cost-effective backup to manage and monitor network,
physical and virtual servers, thereby helping businesses to boost
the availability of critical systems.
The divesture may seem appropriate as a part of the company's
growth plan, which is focused on eliminating non-core assets and
investing in core areas of the business, from which it derives most
of its revenues. Moreover, these initiatives are expected to yield
results in fiscal 2015 and provide the company with adequate growth
opportunities in the long run.
It is worth mentioning that CA has almost completed its
restructuring initiative - 'Fiscal 2014 Plan.' Per the plan, the
company has nearly completed the layoff of 1,800 employees and
consolidated several facilities into development hubs. A leaner
cost structure will help the company to improve its
We believe that the breadth of CA's products and increased
efficiency offered by them will help attract customers across
sectors, lending stability to the business model. We are also
positive about CA's increased cloud exposure. A decent renewal
rate, modest cash position and share repurchase also appear
On the other hand, increasing competition from
) and exposure to Europe remain the near-term headwinds.
CA currently has a Zacks Rank #3 (Hold).
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