CA sales still under cloud after slow Q1

Software $675 million one-off charge forces loss in third quarter.

Computer Associates (CA) has reiterated its uncertainty as to when sales will recover following a first-quarter warning of slow growth.

For its third quarter, CA saw revenue increase 18 per cent to $1.05 billion, but made a $480.8 million loss due to a one-off charge of $675 million.

The expected charge related to shares issued to Charles Wang, chairman of CA, Sanjay Kumar, the company's president, and Russell Arzt, its executive vice president.

But despite this, the software vendor's earnings exceeded Wall Street's expectations (PC Dealer, 29 July).

However, Kumar warned at the time: 'The ripple effect of Asia, coupled with deferred software purchasing decisions as customers deal with year 2000 projects and mainframe hardware transition issues, leads us to believe that our revenue and earnings growth will slow over the next several quarters.'

Since the announcement, CA's share price has slumped 47 per cent to about $30, a situation not helped by the general market downturn throughout all US stock exchanges.

But, according to US reports, Wang said 'uneasiness' among CA's top three to five customers about Asia had continued and it did not know when sales would improve. Customers have delayed making purchasing decisions because of fears over the Asian crisis.

He said: 'I don't have a crystal ball. The situation depends on the international monetary fund and what it is going to do, and whether currencies get devalued.'

But Wang added that CA was still comfortable with Wall Street estimates of earnings of 48 cents for its fiscal second quarter.

Meanwhile, CA has appointed Jacques Reboul as senior vice president and general manager of its Global Professional Services European operations, as part of it's drive to improve services capabilities.