CA, Inc. (CA): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


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 stock.


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 virtualization.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: CA , IT

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