Computer Associates (CAI)
today beat expectations for the June quarter, as client-server
product revenues grew over 50 percent.
The software maker reported net
income of $155.8 million, or 42 cents a
share, up from $119.8 million, or 32 cents a share, reported in
the same quarter a year ago. Wall Street was expecting earnings of 39
cents a share, according to First
The company's stock gained 1-1/4 in active trading, up from yesterday's close
of 63-1/16. Volume was heavy with nearly 900,000 shares trading hands.
Chuck Raabe, an analyst with Collins & Company, expected "growth
across most of their product lines," noting that the company has great
opportunities with so many software products, many of which face little competition.
And revenues for the quarter reached $890.7 million compared with $792.1
million a year ago.
Client-server product revenue grew 51 percent on a year-over-year basis
and accounted for over 40 percent of total revenue. In addition, the
company said it saw improved results from its European operations and is
optimistic about future opportunities in those areas, particularly for
its Unicenter TNG enterprise management platform.
Meanwhile, the company also noted North America, Latin America and the
Asia-Pacific regions continue to show good growth.
"Further progress will require continued improvement in Europe, modest
mainframe demand, and ongoing strength in the midrange business, but
management's confidence seems to be rising and the sales pipelines sound
healthy," said Hugh Shytle, an analyst with Cowen & Company, in a recent report.
He added that CA is uniquely positioned to benefit from the demand for open
systems management, particularly on Windows NT.
Other analysts see opportunities ahead as CA offers some core functions
of Unicenter as a separately available framework. The company will
continue offering its traditional all-in-one package with operations
management applications and core framework services. CA will distribute
the framework via OEM partners.
Richard Scocozza, an analyst with Brown
Brothers Harriman, recently raised his short-term target to $74 from $60
and long-term price target to $90 from $72, based on expansion of the
market and potential in the systems management software market.
"We believe CA will remain the leader in systems management and momentum
will continue to build for Unicenter TNG. We expect the systems management
software business to be one of the highest-growth segments in the software
industry over the next few years," said Scocozza in a research report.
CA provides database, enterprise management, systems management, and
business software applications to Fortune 500 companies, with nearly 95
percent penetration of that elite corporate sector, according to internal