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CA earnings report raises eyebrows

Computer Associates International (CA) yesterday announced its pro forma earnings rose slightly in the fourth quarter of its financial year to $1.44bn (£1.01bn), compared with $1.39bn in the same period last year.

However, so-called reported earnings showed that revenue plunged during the quarter, from $1.9bn a year ago to $733m in the quarter ended 31 March.

CA's accounting practices came under fire recently after some analysts questioned how the company books revenues from its contracts. Some argued that the firm is using new accounting practices to hide a decline in revenue.

CA responded that its pro forma results are a more meaningful way to see its actual revenue stream. For example, pro forma results book contract revenues incrementally, instead of claiming full contract values up front.

"We are pleased with our overall performance in the fourth fiscal quarter despite a very challenging period for the high-technology sector," CEO and president Sanjay Kumar said in a statement.

Pro forma quarterly earnings rose from $207m a year ago to $274m. However, actual reported earnings showed a $410m loss, compared with a $392m profit a year earlier.

CA's stock was up 2.6%, or 84 cents per share, in early after-hours trading following the earnings announcement. It had closed at $32.56 per share.

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