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CA sales propelling earnings

Bolstered by a jump in sales of client-server products, Computer Associates expects to beat the street when it reports its earnings next month.

Bolstered by a jump in sales of client-server products, Computer Associates (CA) expects to beat the street when it reports its earnings next month.

The company said it will weigh in with earnings at 90 cents a share for its fourth fiscal quarter ending March 31, which is 4 cents higher than Wall Street analysts are expecting, according to First Call. For the same quarter a year ago, the company reported earnings of 70 cents a share.

Meanwhile, its net income for the fiscal year is expected to be $2.54 per share, up from $1.99 in fiscal year 1996.

"It is a pleasant change after Novell's (NOVL) earnings. It is nice to hear that CA is doing well. They do have some significant advantages because their product line is so diverse," said Bruce Raabe, an analyst with Collins & Company.

Revenue for the quarter is projected to be $1.2 billion, up from $1.1 billion a year ago. CA said its client-server line of products, led by Unicenter TNG, is expected to yield revenues of $440 million for the quarter, a 46 percent increase over the comparable period last year.

The company also expects its fiscal year revenues to be slightly over $4 billion, about a 15 percent increase over the $3.5 billion reported for the previous fiscal year.

The company said that revenue generated internationally is consistent with expectations, but added that a strengthening U.S. dollar will hit international results with a $35 million negative revenue impact.

"The strong dollar is hurting a lot of companies...IBM (IBM) is having the same problem. Your option is not to compete and avoid the risk. The important thing is to look at growth and sales and quality of products," said Raabe.

He added that CA generates about 47 percent of its business internationally and "that is significant exposure, but we have to look at the big picture...$35 million isn't that much money compared to total revenue," he said.

Full-year fiscal results exclude the $598 million after tax charge for research and development that was taken in the third fiscal quarter, in conjunction with CA's acquisition of Cheyenne Software.

CA expects to report final financial results for the quarter and year ending March 31, on May 21.