- Non-GAAP EPS increases to a $1.48 to $1.55 from a $1.45 to $1.52 representing a 24% to 30% growth.
- GAAP EPS increases to $1.31 to $1.38 from a $1.28 to $1.35, representing 41 to 48% growth inclusive of approximately 30 million of restructuring charges.
- Both GAAP and non-GAAP EPS guidance factors in a currency adjustment of $0.08 in the second half of the year due to the strengthening dollar.
Cash flow from operations increases to $1.15 billion to $1.2 billion from $1.15 billion to $1.8 billion, representing a 4% to 9% growth.
This includes about 120 million in restructuring payments and relatively flat cash taxes.
The company continues to expect approximately 570 million actual shares outstanding and weighted average diluted share count of approximately 541 million shares and a full year tax rate on non-GAAP income of approximately 37%.
The company announced today that the Board has authorized a new 250 million stock repurchase plan.
During the quarter, the company signed several large contracts including one with a large systems integrator and a number with financial services institutions.
These large deals, which were renewals of the existing contracts, included additional mainframe capacity and the sale of new CA technology. While these deals resulted in little short term impact in the second quarter results beyond the favorable impact on bookings but benefit from these contracts will be felt in future quarters.
The company has been working continually over the last three years on cost structure improvements and putting in place the business process changes that will improve the company’s operations. Over this period, the company has eliminated and shifted headcount, reduced the facilities footprint, and made substantial investments in internal systems and processes and in new products.
These efforts have resulted in cost savings, which are reflected in the operating margin which has improved to about 30%.
CA has assessed the deferred revenue portfolio and the near-term implications on revenue over the rest of the fiscal year.
These are minor and can be strategically managed. Long-term, the company may see some pricing pressure when these contracts renew over the next couple of years. As in the past, due to the staggered nature of the renewals, the company can and will mitigate these situations by selling increased capacity, new products and winning new customers.
Key questions and answers from the second quarter fiscal 2009 earnings call conducted by CA, Inc. (CA) on October 29, 2008.
John DiFucci:
Operating margin exceeding what I think your low end long-term goals have been. Do you think that it''s time to think about that being a little higher? Correct me if I''m wrong, your longer term goals were somewhere in the 30% to 34% range but it looks like you''re there already and it looks like potentially that could improve.
Nancy Cooper: All the restructuring efforts we''ve done are really paying off in improved cost performance. So we''re delighted to be where we are and we need to look at the guidance we gave almost a year ago.
John DiFucci:
I know there''s still some more on the restructuring plan. Should we assume there will be some over the next couple quarters or are you cutting back on that at this point, waiting for other opportunities?
Nancy Cooper: We guided to about 30 million of restructuring this year and we still have some facilities that we want to consolidate, so we will be continuing to pursue those, they are just taking a little longer than we thought and we feel that that will be the help on continuing to drive margin performance.
John DiFucci:
Your guidance given the share count you said that doesn''t include any share buybacks or any meaningful share buybacks in this particular quarter?
Nancy Cooper: That’s correct because we are really looking opportunistically to do this and we are managing cash very carefully.
John DiFucci:
You mentioned you had a major product launch in October. I guess shoring up your product portfolios both through your internal development but also through opportunistic acquisition and given what''s happened to the market here to a lot of people''s stocks it seems to be a lot of best-in-class products out there or smaller companies that look attractive. Can you comment on that? What might you be looking at in regards to size or even the kinds of companies?
John Swainson: We''re always looking. And values are better now than we''ve seen in some time. However, our priority has been to develop software ourselves and an example of that is the Data Center Automation Manager product that we announced in early October and we believe will be very successful in the marketplace and will give people like OpsWare and Blade Logic a real run for their money.
We have announced one very small acquisition in the security space and you will likely see us do some tackling size acquisitions at some point in the future. And it will all be around our core Enterprise IT Management portfolio and they will all be small.
