CA returns to profitability

Computer Associates International (CA) returned to profitability in its most recent quarter, reporting on Wednesday better-than-expected results showing revenue and income gains over the same quarter last year.

Strong sales and internal cost-cutting helped the company get out of the red sooner than expected, Chairman and Chief Executive Officer Sanjay Kumar said.

Revenue for the quarter ended June 30, the first of CA's fiscal year, was US$813 million, up 6 percent from the year-earlier figure of $765 million. CA's net income was $10 million, versus a $65 million loss in the year-earlier quarter. Net income per share was $0.02, or $0.14 on a pro forma basis, excluding acquisition-related amortization. On that pro forma basis, analysts had been expecting per-share earnings of $0.09, according to the consensus estimate complied by Thomson First Call.

CA has been pushing its customers to purchase its software through short-term subscription contracts rather than one-time licensing fees. The company's average contact duration is now down to 2.85 years, and its backlog of contracted but not yet booked revenue totals $3.8 billion, CA said.

Because of that ongoing shift, the company's revenue from subscription fees grew from $314 million in last year's first quarter to $449 million in the just-ended quarter. Non-subscription software fees, maintenance, financial and professional services revenue all dropped year-on-year.

CA hopes to reverse the downward trend of its services revenue with a new organization, CA Technology Services, formed in April. The group focuses exclusively on supporting CA's own products.

CA expects the current tight economic climate to last for the next several quarters, Kumar said.

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