Revenue slump adds to CA's woes

Computer Associates has joined the list of enterprise software companies warning they will miss their financial goals after...

Computer Associates has joined the list of enterprise software companies warning they will miss their financial goals after lowering its revenue expectations.

CA now expects to generate between $830m and $850m (£448m-£459m) in the first quarter of its 2005 financial year, which ended on 30 June. Its previous forecast was for between $865m and $885m. The company plans to report final results for the quarter on 22 July.

CA blamed the expected shortfall on, among other things, a weak performance by its services unit and lower subscription revenue.

However, the company reiterated its profit forecast, which it put down to "excellent expense controls". CA also stood by its forecast for operating earnings per share, which excludes certain charges.

The lower expectations didn't dampen the spirits of chief operating officer Jeff Clarke, who said he was satisfied with performance in the light of industry dynamics.

Enterprise software suppliers Siebel Systems, PeopleSoft and BMC Software had separately announced they would miss previously stated revenue goals, shortly after Veritas Software issued a similar warning.

Sagging revenue is not CA's only problem. In April, it admitted prematurely booking $2.2bn (£1.2bn) in revenue over a period of nearly two years in an attempt to inflate quarterly financial results. Four former finance department employees have pleaded guilty to charges of securities fraud and obstruction of justice

The scandal prompted Sanjay Kumar to step down as CA's chief executive officer in April to become its chief software architect, and to resign from the company altogether in June.

CA had to restate results for its 2000 and 2001 financial years. The company and some former executives are under investigation by the government.

Juan Carlos Perez writes for IDG News Service



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