On May 30, 2014, we issued an updated research report on flash
storage solutions provider
) following the company's better-than-expected fourth quarter
fiscal 2014 results.
The company's newly introduced product ranges and best-in-class
services are likely to cater to increasing demand in the industry
and boost revenue streams, going forward. Moreover, CA is
witnessing rapid adoption of its Nimsoft Monitor Snap, a
feature-rich free utility version of its popular CA Nimsoft Monitor
solution, which manages and monitors network, physical and virtual
servers, storage and databases. We believe that the wide range of
products and the increased efficiency offered by them will attract
customers across sectors, lending stability to the business model.
Additionally, CA has also adopted the "go to market," sales
strategy. This management technique brings together all the
commercial functions including sales, marketing, brand management,
pricing and consumer insight. This integration of marketing
functions helps to improve the bottom line because it helps the
company to take out some costs.
Furthermore, 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. The leaner cost structure will help the
company to improve its profitability as revenue growth picks up in
To complement its growth prospects, CA has also resorted to
strategic acquisitions. In the past, the Layer 7 Technologies
acquisition (an API management company) benefited the company's
business. Also, the company signed an agreement to acquire a
Texas-based enterprise software company, Hyperformix Inc. With
these acquisitions, CA Technologies can strengthen its position in
virtualization and automation in the cloud computing environment.
Apart from this, CA's strategic steps to increase shareholder value
through share repurchases are also encouraging. During fiscal 2014,
the company repurchased shares worth $505.0 million and paid
approximately $453.0 million as dividends. Apart from this, CA has
authorized approximately a $1.0 billion share repurchase program to
be completed in approximately three years. These continued share
buybacks are expected to support the company's bottom line going
On the flip side, CA faces stiff competition from
International Business Machines Corporation
), as all the major tech giants are trying to grab a share of this
Moreover, currency fluctuations and exposure to Europe remain the
near-term headwinds as the company derives a substantial portion of
its sales from outside the U.S.
Currently, CA has a Zacks Rank #3 (Hold).
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