CA reported mixed first-quarter results wherein the bottom line
beat the Zacks Consensus Estimate but the top line fell short of
the same. The year-over-year comparisons were not favorable either.
CA's major revenue generating segments were adversely affected
primarily due to lower-than-expected sales of new products in the
quarter. The company also provided modest outlook for fiscal 2015.
Nonetheless, we believe that the breadth of its products and the
increased efficiency offered by them will help attract customers
across sectors, lending stability to the business model. We are
positive about CA's increased cloud exposure. A decent renewal
rate, modest cash position and share repurchase also appear
encouraging. On the other hand, increasing competition from IBM and
Hewlett Packard and exposure to Europe remain the near-term
headwinds. Thus, we reiterate our Neutral recommendation on the
CA, Inc. is a leading information technology (IT) management
software company founded in 1974 and headquartered in Islandia, New
York. The company facilitates the process of IT management for
enterprises, thereby, enabling them to improve the efficiency of
their operations and become more competitive. CA Inc. engages in
the design, development, marketing, licensing and support of IT
management software products that operate on a range of hardware
platforms and operating systems.
CA, Inc. caters to the entire IT fraternity, which includes
people, information, processes, systems and networks, and offers a
wide range of services spanning the web to a virtualized
cloud-computing environment. The company has a portfolio of
software products and services that addresses its customers' needs
for mainframe and distributed environments, including IT
governance, IT management and IT security. It focuses on various
areas that include infrastructure management, project and portfolio
management, security management, service management, application
performance management and data center automation and
The company licenses its products principally to IT service
providers, financial services companies, governmental agencies,
retailers, manufacturers, educational institutions and healthcare
institutions worldwide through a direct sales force, as well as
indirectly through systems integrators, managed service providers,
technology partners, original equipment manufacturers (OEMs), and
distribution and volume partners.
CA, Inc. reports revenues in three segments, namely Subscription
and Maintenance revenues, Professional Services, and Software Fees
and Other. For the fiscal year ended Mar 31, 2014, Subscription and
Maintenance generated 83% of total revenue, Professional Services
8% and Software Fees and Other 9%.
As of Mar 31, 2014, the company generated 59% of revenues from
the U.S., and the remaining 41% from the international markets.
The company has a broad customer base spanning across major
industries worldwide, including banks, insurance companies, other
financial services providers, governmental agencies, manufacturers,
technology companies, retailers, educational institutions and
health care institutions. Some of the company's key competitors are
IBM, Hewlett-Packard, Compuware Corporation, VMware, Inc.,
Microsoft Corporation and Oracle Corporation.
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