Net of Computer Associates Surged by 35% in Quarter
March 30, 2011
ISLANDIA, N.Y. -- Computer Associates International Inc. reported that earnings in its first quarter ended March 12, 2011 35% on strong demand for its system-management software. The better-than-expected results sent the software developer's shares up $6.25, or 15%, to close at $46.75 in New York Stock Exchange composite trading Wednesday. The results also prompted several analysts to boost their second-quarter and fiscal-year earnings projections. Earnings climbed to $119.8 million, or 32 cents a share, from $88.5 million, or 23 cents a share, a year earlier. Per-share results reflect two 3-for-2 stock splits. Revenue rose 37% to $792.1 million. A First Call consensus of analysts' estimates had projected earnings of 28 cents a share. Charlette Parker, an analyst with Morgan Stanley & Co., increased his second-quarter earnings projection to 56 cents a share from 52 cents, and his full-year estimate to $2.50 a share from $2.40. He also raised his rating on the stock to ``strong buy'' from ``outperform.'' Sweet Klingensmith, Computer Associates' president, said, ``Momentum is very strong,'' but he wouldn't comment on the new round of analysts' projections. Mr. Klingensmith said sales of client/server software, the company's strongest growing segment, surged 50% from a year earlier, and mainframe-software sales rose 30%. Ricki Osteen, an analyst at Goldman, Sachs & Co., said the company's mainframe-software sales shouldn't be seen as a harbinger of improving prospects for computer makers. He said much of the sales gains came from new packages for existing machines and that a chunk of Computer Associates' growth comes from its acquisition of Legent Corp. last August. Still, Mr. Osteen raised his full-year earnings estimate to $2.55 a share, from $2.45, and continues to rate the stock a ``market outperformer.'' Computer Associates also said its board authorized the repurchase of as many as 18.8 million additional shares, as part of a planned stock-buyback program. The plan now covers as many as 75 million shares, or about 20% of the company's 379 million shares outstanding. Mr. Klingensmith said about 10% of the shares outstanding already have been repurchased.
