This summary is based on the third quarter fiscal 2008 earnings call conducted by CA Inc. (CA) on January 31, 2008.
Management:
VP of IR: Joseph Doncheski
CEO: John Swainson
CFO: Nancy Cooper
Key Investor Issues:
- Revenue rose 10% to $1.1 billion from $1 billion in fiscal 2007.
- Income increased to $163 million, or 31cents per share from $52 million, or 10 cents per share in the prior year.
- The company signed one of its largest deals with Sallie Mae.
Year-To-Date Highlights:
- Revenues were down 10% to $3.2 billion
- Net income rose 226% to $429 million or 83 cents a share.
- Cash and cash equivalents amounted to $2.1 billion.
Third-Quarter Highlights
Revenue rose 10% to $1.1 billion from $1 billion in the prior year as total bookings were $1.2 billion and growth in subscription revenue, which increased 16%.
- Maintenance fell 26%, largely because it continued to be absorbed in the subscription business.
- Revenue from professional services in the third quarter was $92 million and down 1% year-over-year.
- North American revenue was up 5% over the prior year and international revenue increased 17% or 4% on a constant currency basis.
The company signed one of its largest deals with Sallie Mae, the provider of student loans and administrator of college saving plans in the United States and a long time CA customer.
- Total product and services bookings were $1.2 billion compared to $1.6 billion in the prior year due to the pent-up demand, the completion of the sales force realignment, and the closing of six large contracts.
– The firm signed 16 license agreements greater than $10 million, which aggregated to $303 million, compared to 18 such contracts aggregating to $700 million in the prior year period.
- Operating expenses were $800 million, compared to $791 million in the prior year period, and currency negatively affected operating expenses by about $30 million, or 4% points.
Income from continuing operations was $163 million, or 31 cents up 213%, compared to $52 million or 10 cents per share in the prior year driven by revenue growth.
- Expenses, which include purchase software, intangible amortization, restructuring and other, were $851 million, down from $907 million in the prior-year period.
- Net interest expense was $10 million.
- The company recorded restructuring and other expenses of $22 million during the quarter, compared to $32 million in the prior year period.
- Cash flow from operations declined to $233 million, from $587 million in the prior-year period primarily attributable to lower collections from expected lower bookings.
Cash flows benefited from a refund due to an overpayment of current year cash taxes of $45 million.
- The firm ended the quarter with $2.1 billion in cash and cash equivalents and $2.6 billion total debt, bringing the net debt position to $500 million.
- Total deferred subscription value balance as of the end of the third quarter was almost $6 billion up 6% from last years third quarter was about a half from currency.
- The firm’s EITM strategy enables it to communicate its value proposition to customers in a clear and compelling way.
New Deals:
- The firm is working with Sallie Mae to further expand their IT Service Management strategy and to help with their technology deployment.
- Through an extension of existing solutions including CA’s Siteminder, Service Desk and Clarity, along with the introduction of several new products such as CA’s CMDB, Wily Introscope, CEM and Service Catalog, Sallie Mae is addressing their business needs
head-on to round out their Governance portfolio.
- Another important engagement is with T-Mobile, a leading wireless provider, as T-Mobile has decided to expand on its initial investment in CA''s eHealth and Spectrum network performance management across its entire enterprise.
- With service availability being a top priority, CA''s integrated offering enables T-Mobile to deliver world class network performance and helps reduce customer churn within the highly competitive telecom market.
Fiscal 2008 Outlook:
