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CA Inc. (CA - Analyst Report) is scheduled to announce its second quarter 2013 results after the close of trading on October 25, 2012. We do not see much variation in analysts’ estimates at this point.

First Quarter Recap

The company reported decent first quarter 2013 adjusted earnings per share (EPS) of 60 cents, ahead of the Zacks Consensus Estimate of 56 cents. Total revenue in the reported quarter came in at $1.145 billion, down 1.5% from $1.163 billion in the year-ago quarter.

The company witnessed total bookings of $553 million in the first quarter, down 36.0% year over year, primarily due to a decrease in renewals. The company had previously stated that it expects fiscal year 2013 renewal portfolio to decline in the single digit range annually, with the first quarter being the low point.

Reported GAAP net income was 51 cents per share versus 48 cents per share in the year-ago quarter.

Fiscal 2013 Guidance

For fiscal 2013, the company expects revenue growth in the range of 1.0% to 2.0%. GAAP diluted earnings per share from continuing operations in constant currency are expected to rise in the range of 12.0% to 14.0%.

Non-GAAP diluted earnings per share from continuing operations are expected to grow in the 10.0% to 12.0% range. This translates to non-GAAP diluted earnings per share of $2.45 to $2.50 and cash flow from continuing operations of $1.54 billion to $1.57 billion.

Agreement of Analysts

Out of the seven analysts providing estimates for the second quarter, none revised their estimates over the last 30 days. Also, none revised their estimate over the last 30 days for the December quarter. Similarly, no revision was witnessed for fiscal 2013 and 2014.

Some analysts are optimistic about sales based on the focus of the new management towards developing regions. Moreover, the company is also making considerable effort to enhance its product portfolio by offering multiple versions of the same product, so that the customers can enjoy the most recent offerings.

Moreover, analysts are also considerably optimistic about the fact that the company offers the 'SaaS first' policy for all new development, so that it can overtake business from other SaaS based vendors like ServiceNow.

The lack of estimate revisions reflects the fact that there were no major catalysts during the quarter. Consequently, the analysts are sticking to the estimates projected post first quarter earnings.

Magnitude of Estimate Revisions

The magnitude of revision is also minimal post the company’s first quarter results. Overall, estimates for the upcoming quarter have remained constant over a period of 30 days, but dipped by 2 cents to 55 cents over the past 90 days. The estimates of 2013 remained constant over the last 30 and 90 days to $2.34. For fiscal 2014, estimates remained constant over the last 30 days, but declined by 2 cents to $2.53 over the last 90 days.

Recommendation

CA Inc. posted decent first quarter results exceeding the earnings estimates, although revenue declined on a year-over-year basis. This apart, the company witnessed decline in bookings. However, the product demand trend was moderate in the reported quarter.

Looking into the company’s enhanced product portfolio, growing customer base and revival in the macroeconomic scenario, we believe that the company has provided conservative guidance for fiscal 2013.

Intense competition in the software and cloud computing space from big players such as IBM (IBM - Analyst Report) and Hewlett-Packard (HPQ - Analyst Report) is a challenge. In addition, its high debt balance and European exposure may pose as challenges going forward. Reduction in tech spending by government agencies and European exposure are the other headwinds going forward.

The company currently has a Zacks #3 Rank, implying a short-term Hold rating.

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