CA well positioned to weather economic storm

As the economy continues to dominate national news, industry watchers are scrutinizing earnings announcements from high-tech vendors. Some are on the disappointing side, but others give financial analysts hope that there is a light at the end of this very dark tunnel.

CA, for instance, last week announced its second quarter fiscal 2009 results and reported revenue had increased by 4% over the similar period last year. The company recorded $1.107 billion in total revenue in the second quarter 2009, compared to $1.067 billion over the same period in the previous fiscal year. And for the first half, revenue was $2.194 billion, up 5% from the $2.092 billion reported in the first half of fiscal year 2008, according to a CA press release. Company management contributed its financial report in part to efforts to improve efficiencies.

"Over the past few years we have taken steps to increase efficiency, improve our cost structure, foster stronger and deeper relationships with our customers and deliver the industry's most innovative products. These efforts are driving our results," said CA CEO John Swainson in a statement. "Based on our first half performance and our outlook for the remainder of the fiscal year, we are increasing our annual guidance for GAAP and non-GAAP earnings, bookings and cash flow from operations. We are updating our revenue outlook to indicate that we anticipate full year total revenue growth to be at the lower end of our guidance."

Industry watchers speculate that CA is in a good position to handle a slowing global economy. According to Melissa Grady, analyst for Software Business Quarterly at Technology Business Research (TBR), a financial downturn won't impact CA due to several factors.

"CA's diverse portfolio puts the company in a strong position to weather uncertain conditions and a slowing global economy," Grady says. She goes on to say that CA's "ratable business model, multi-year contract durations and long-term nature of relationships with mainframe customers" will also help the IT management software maker sustain sales in the coming quarters.

"TBR believes that a short economic downturn will have negligible impact on CA's revenue and sales pipeline," Grady says. "While the economic environment may force CA to be more price competitive to win new customers and deals against the competition. … The company’s focus on communicating the potential business advantage and cost savings of its product portfolio will help sustain sales growth with existing and new customers."

Denise Dubie is senior editor with Network World.