CA reported disappointing preliminary results for the fourth quarter of fiscal 2006 Tuesday, blaming both a change in its accounting model in relation to recognizing revenue from acquisitions and a slow sales bookings start to the quarter.
Quarterly results "were not in line with our expectations," CA President and Chief Executive Officer John Swainson said in a statement. The software vendor is still in the middle of a complete transformation of its operations, trying to reinvent itself in the wake of an accounting scandal.
The company intends to announce its fourth-quarter financials May 30.
CA now expects to report total fourth-quarter revenue of between US$940 million and US$950 million down from its previous expectation of between US$975 million and US$1 billion, according to a news release. Earnings per share based on GAAP (generally accepted accounting principles) should be in the range of US$0.00 and US$0.02 compared with the previous estimate of US$0.09 to US$0.10.
CA had previously recognized revenue from companies it had purchased in a perpetual model, but is moving to a ratable model where revenue is recognized monthly over the life of a sales contract. The vendor has been busy on the acquisition trail since Swainson was officially named CA CEO in February 2005.
A piece of its history CA would probably rather forget unexpectedly bubbled to the surface Monday with the news that the company's former CEO Sanjay Kumar pleaded guilty to financial fraud charges.
Kumar and co-defendant Stephen Richards, previously head of worldwide sales at CA, had been expected to go to trial May 8 in a case brought by U.S. government prosecutors accusing them of fraudulent accounting practices involving the false reporting of hundreds of millions of dollars in licensing revenue. Richards also pleaded guilty Monday.