We upgrade our recommendation on CA to Outperform based on the
company's improved guidance for fiscal 2014. Moreover, CA reported
better-than-expected third-quarter results. Led by an increase in
contract renewals, the company's bookings increased year over year.
Moreover, we remain positive about CA's increased cloud exposure.
Modest cash position and share repurchase also appear encouraging.
However, competition from its peers, year-over-year sales declines
and exposure to Europe remain the concerns.
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, 2013, Subscription and
Maintenance generated 83.0% of total revenue, Professional Services
8.0% and Software Fees and Other 9.0%.
As of Mar 31, 2013, the company generated 59.0% of revenues from
the U.S., and the remaining 41.0% from the international
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, BMC and Symantec.
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