SOUTHFIELD – Computer Associates stock price fell some 5 percent Friday after the corporate software maker said its quarterly profit sank, despite a 7 percent rise in revenue, due to an increase in expenses and taxes.
Shares of the Islandia, N.Y., company ? which maintains its Midwest regional office in Southfield ? fell $1.36, or 4.8 percent, to $27.30 on higher-than-normal volume of 7.6 million shares.
Credit Suisse First Boston analyst Jason Maynard said his investment thesis on CA’s stock remains intact although the shares are unlikely to outperform anytime soon. He rates the stock neutral with a 12-month target price of $28.
Maynard has confidence in CA’s new management team, but said “it will take some time before we see tangible evidence of a turnaround.”
CA said its fourth-quarter profit fell to $17 million, or 3 cents a share, from $89 million, or 15 cents a share, a year earlier, when its results also included a gain of $60 million, or 10 cents a share, from discontinued operations.
Revenue for the quarter that ended March 31, rose to $910 million from $850 million in the comparable three-month period a year ago – falling below Wall Street?s expectations. CA said its expenses for the quarter rose 3.8 percent to $838 million, up from $807 million, primarily related to its effort to comply with Sarbanes-Oxley accounting rules.
The company said it will probably delay filing its annual report with the Securities and Exchange Commission for the latest fiscal year for 15 days as it continues to evaluate and test internal audit controls. Such a delay would be permitted under the SEC’s rules.
CA, which has worked to put past accounting scandals behind it, also said it would again make minor restatements to results for previous years for freshly discovered contracts that were booked improperly. After the close of Friday’s session, Standard & Poor’s cut CA’s credit rating outlook to negative from stable on word of the latest problem contracts.
