CA Technologies, Inc. (CA) reported better-than-expected profits in its fiscal fourth quarter 2013, although revenue contracted, completing the full year of declining sales each quarter as compared to the same period a year earlier. Additionally, the software maker for mainframes and computer systems said that it intends to terminate about 1,200 of its 13,600 employees worldwide and consolidate development sites into centralized hubs in 2014 as it realigns its business priorities.
The rebalancing of resources is expected to result in a charge of $150 million in the new fiscal year. CA said it expects most of the firings to happen in the first quarter with new employees being brought in over the year “with skills that will enable the company to better focus its resources on priority products and market segments.”
For the latest quarter, Islandia, New York-based CA reported revenue of $1.15 billion, down from $1.19 billion in last year’s quarter. GAAP-based income from continuing operations improved to $242 million, or 53 cents per share, from $211 million, or 45 cents per share, in Q4 fiscal 2012, a 15 percent increase. Excluding one-time items, profits from continuing operations increased to $310 million, or 68 cents per share, compared to $264 million, or 56 cents per share, in the year earlier quarter.
Wall Street was expecting EPS of 55 cents per share on revenue of $1.14 billion.
North American sales declined 3 percent to $724 million while international revenue dipped 1 percent to $427 million. Total bookings during the quarter dropped 4 percent to $1.46 billion. Total backlog declined 7 percent to $7.77 billion.
Sales in the mainframe solutions segment were down 1 percent to $620 million, although operating margin improved 2 percentage points to 58 percent. Enterprise solutions revenue declined 6 percent to $432 million. Service sales, the smallest segment at CA, rose 6 percent to $99 million.
"While we were able to achieve GAAP and non-GAAP diluted earnings growth for the year, we know we can do better to drive new sales and revenue performance," said Mike Gregoire, chief executive at CA Inc.
For all of fiscal 2013, CA reported revenue of $4.64 billion, lower than the $4.81 billion reported in 2012. GAAP profits for the full year improved to $955 million from $938 million. Adjusted earnings, which exclude stock-based compensation, purchased software and other certain other gains and losses, increased to $1.17 billion from $1.12 billion last year.
Looking forward, CA sees 2014 adjusted earnings declining between 4 percent and 7 percent in constant currency to a range of $2.35 to $2.43 per share. Revenue is expected to drop 2 percent to 4 percent to a range of $4.43 billion to $4.52 billion.
Both sides of the outlook were short of analyst expectations of flat earnings on revenue of $4.7 billion.
Shares of CA have grown by more than 25 percent in 2013, including closing at $27.77 on Tuesday, but are looking to open lower on Wednesday following last night’s earnings report.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer