FRAMINGHAM (07/05/2000) - Software rivals Computer Associates International Inc. and BMC Software Inc. are both warning of profit shortfalls in the quarter that ended June 30, in part because of slumps in their mainframe-related businesses.
On Monday, Islandia, New York-based CA announced that it expects financial results for its first fiscal quarter to fall short of predictions made previously by Wall Street analysts. The company said it would report the final results on July 20.
A First Call/Thomson Financial survey of analysts showed that they were expecting average first-quarter earnings of 55 cents per share, or about US$325 million. CA didn't provide a new forecast beyond saying that first-quarter revenue will likely be between $1.25 billion and $1.3 billion. In the same quarter a year ago, CA reported revenue of $1.22 billion.
Business in the just-finished quarter "wasn't as strong . . . as we had hoped," as a result of weak European sales and soft demand for the company's mainframe software, said Sanjay Kumar, CA's president and chief operating officer said in the announcement. He added that CA executives "intend to work aggressively to address the performance issues in our European business."
Houston-based BMC Wednesday also said profits for its first fiscal quarter will end up below expectations because of weak mainframe software sales near the end of the three-month period.
Profits are expected to range from $47 million to $51 million, compared with $105.3 million for last year's first quarter, BMC said. Wall Street analysts had been predicting that the company would improve on last year's profit level, but Max Watson, BMC's chairman and CEO, said in a statement that the number of users who committed to buying enterprise mainframe software licenses in the first quarter was lower than expected.
BMC also said first-quarter revenue would be down, coming in between $365 million and $375 million, compared with the $400.7 million it reported for the same period a year ago.