CA says its results will contain no surprises
Published: 07 May 2004 16:55 BST
Computer Associates International reported its preliminary fourth-quarter and annual earnings on Thursday and announced plans to amend results for the preceding two quarters, deferring $9m (£5.04m) in previously announced revenue.
The company, which has been the subject of an ongoing US Securities and Exchange Commission investigation of its accounting practices, said it expects to report $850m in revenue for its fourth quarter, which ended 31 March.
The estimate meets Computer Associates' earlier announced guidance of quarterly revenue of between $845m and $865m. The company has delayed the official announcement of its results but said Thursday that it expects to report net income of between 6 cents per share and 7 cents per share for the period, or slightly better than its guidance of between 3 cents per share and 5 cents per share.
CA, which makes management, security and storage software, also announced projected results for fiscal 2004, reporting an estimated $3.28bn in revenue, which falls just short of its earlier guidance of between $3.29bn and $3.31bn.
The software maker said it recorded a loss of between 4 cents and 6 cents per share for the year on continuing operations, just above its earlier estimate of a loss of between 5 cents and 7 cents per share. Including a gain on the sale of a subsidiary, CA said it would have had positive income of between 4 cents and 6 cents per share for 2004.
The company said it had earnings per share not under GAAP (generally accepted accounting principles) in the range of 17 cents per share to 18 cents per share for the fourth quarter, and non-GAAP earnings per share of between 60 cents per share and 61 cents per share for the full year, which was in line with its previous guidance. The estimates are in line with analysts' consensus figures from Thomson First Call, which had predicted 17 cents per share for the quarter and 61 cents per share for the year.
CA pushed back by two weeks the date for releasing its official fourth-quarter and annual earnings, moving the announcement to 26 May. The company said it is making the change because of personnel adjustments related to an internal inquiry into the company's accounting practices.
In April, CA admitted that it had prematurely booked $2.2bn in revenue during 2000 and 2001 because of the manner in which the company had accounted for subscription sales of its software. The company has since changed its practices, and it has fired more than a dozen employees as a result of the issue.
CA remains under investigation by the Department of Justice, as well as the SEC, and the software maker has settled shareholder lawsuits related to the accounting scandal. The company's former chief executive, Sanjay Kumar, stepped down as a result of the SEC probe, but he remains with CA as chief software architect.
"Our 26 April restatement was an extensive and time-consuming process," Jeff Clarke, chief operating officer at CA, said in a statement. "It involved a concerted effort by many people at CA and our independent auditors to ensure we completed the work with the necessary rigor and diligence. This effort, which consumed thousands of person-hours, unfortunately necessitated a delay in reporting current results."
Clarke indicated that CA plans to modify earlier reported earnings to defer approximately $4m of revenue from the second quarter of fiscal 2004 and approximately $5m from the third quarter because of an adjustment in the way CA now measures sales of its software.
A group of lawsuits with CA investors, now settled, had alleged that the company hid slumping sales by switching to a new subscription-based license model, which charged customers over the life of a contract instead of by collecting revenue as one lump sum. While that method allowed the company to report smoother sales figures, critics charged that it allowed the company to cover up what were actually declining sales.
"While the overall revenue impact (based on the reporting changes) is very small, it speaks strongly to our desire to be precise and thorough in our reporting," Clarke wrote.
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