CA Profit Falls 7.6% on Another Decline in Revenue

By Michael Calia

CA Inc. (CA) said its fiscal third-quarter profit fell 7.6% as the software maker posted a drop in its top line, dragged down by a revenue decline in its key subscription and maintenance business.

Shares of CA were up 8% to $37 in after-hours trading, however, as results surpassed expectations and the company again boosted its guidance for the fiscal year.

The company again raised its year outlook, saying it now expects adjusted per-share earnings of $3.05 to $3.12, up from its October projection of $2.96 to $3.03. The company also said it expects revenue of $4.52 billion to $4.57 billion, up from its previous call of $4.39 billion to $4.48 billion.

CA, formerly known as Computer Associates, produces software for mainframe computers and other hardware, an industry that has struggled recently. The company has sought to improve its marketing, and last year it unveiled a plan to focus on higher-priority products by cutting jobs and consolidating its development sites.

"While I'm encouraged by our performance in Q3, we need to continue to improve our execution across development, marketing and sales," Chief Executive Mike Gregoire said. "Based on our results so far this year, we expect our fiscal year 2015 revenue growth rate and non-GAAP operating margin to be similar to fiscal year 2014."

The company on Tuesday also said George Fischer, executive vice president and group executive of worldwide sales and services, is leaving the company after a 20-year tenure. Adam Elster, currently the head of CA's mainframe and customer success business, takes over effective immediately, the company added.

For the quarter ended Dec. 31, CA reported a profit of $232 million, or 51 cents a share, down from $251 million, or 55 cents a share, in the prior-year period. Excluding share-based compensation and other items, adjusted per-share earnings rose to 84 cents from 63 cents.

Revenue dropped 2.7% to $1.16 billion. The company has reported revenue declines for seven consecutive quarters.

Analysts surveyed by Thomson Reuters had projected a profit of 70 cents a share on revenue of $1.13 billion.

Subscription and maintenance revenue, which contributes the lion's share of the company's top line, fell 1.6% to $951 million. Professional services revenue decreased 3.1%, and revenue from software fees and other businesses fell 11%.

Expenses edged up to $829 million.

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