CA reports profit despite internal audit

Computer Associates International has warned that it may have to restate its financial results following an internal audit.

Computer Associates International has warned that it may have to restate its financial results following an internal audit.

CA chairman and chief executive officer Sanjay Kumar noted that the US Securities and Exchange Commission (SEC) is still contemplating a civil action against it. The SEC's move was triggered by the premature recognition of sales contracts, some of which were never closed.

Kumar said the CA internal audit committee is nearing the completion of an independent investigation, which may result in the restatement of some of its revenues. But, he added, it will probably "not result in any change in the company's consolidated financial statements".

Nevertheless, he said the committee does not believe it will affect the numbers CA has reported based on its existing business model, which was adopted in October 2000.

"We take the issues raised by the government very seriously and are making every effort to respond as expeditiously as possible," Kumar said.

The systems management software supplier also announced its third-quarter results for the 2004 financial year, reporting a jump in revenue to $844m (£456m), a 12% increase over the same quarter the previous year. That figure exceeded CA's own estimate of $817m.

Income from continuing operations totalled $21m, compared with a loss of $47m in the same quarter last year.

The latest earnings figures reflect a reversal from the second quarter, when CA reported a loss of $87m on revenue of $833m, largely because of a $113m litigation settlement.

The company attributed the uptick to strong channel and services performance, as well as the stronger position of the euro over the US dollar.

"Overall bookings, which increased substantially over last year, performance in our channel business and strength in worldwide operations all contributed to this strong performance," Kumar said.

Marc L Songini writes for Computerworld

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