15 May 2003 Computer Associates (CA) has posted fourth quarter and full year revenues up by 4% and 5% respectively in the period to the end of March. Net losses were also reduced, partly as a result of a radical cost-cutting program.
“In a difficult political and economic environment, IT buyers are increasingly focused and disciplined in their investment decisions and are demanding immediate as well as a long term return on investment,” said CEO Sanjay Kumar.
However, he warned that profitability would prove elusive in the current financial year for the world?s fourth biggest software vendor, despite forecasting a further increase in revenues to between $3.28 billion and $3.43 billion.
Kumar also revealed that the company was subject to two more subpoenas from the US Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) in relation to the ongoing investigation into CA?s accounting practices.
In the fiscal 2003 fourth quarter, CA posted revenues of $801 million, up 4% from the $772 million posted in the same quarter a year earlier. Net income fell from $238 million to $106 million in the same period.
For the full year, revenues busted the $3 billion barrier, rising to $3.12 billion compared to $2.96 billion in fiscal 2002. Net loss dropped to $267 million from $1.1 billion, as a result of a cut of $870 million in the company?s costs during the year.
However, a closer examination of CA’s accounts suggest that more than half of these cost cuts can be attributed to a decline in amortisation of goodwill, related to earlier acquisitions.
Nevertheless, CA’s revenue backlog remains healthy. At the end of the fourth quarter, the figure stood at $3.77 billion, up by $273 million compared to the third quarter.
This provides a useful indicator of the company’s long-term health, since it changed its revenue recognition policy in 2000 to book revenue evenly throughout a contract’s life, rather than booking it all up-front as it had done before.