We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CA Inc. (CA) Signs Deal to Buy Veracode for $614 Million
Read MoreHide Full Article
Information technology (IT) management software company, CA Inc. (CA - Free Report) recently announced that it has inked a deal to acquire Veracode, a Burlington security software company. The all-cash deal worth approximately $614 million is expected to close in the first quarter of fiscal 2018 (subject to customary closing conditions).
About Veracode
Founded in 2006, Veracode offers cloud-based software that helps organisations to run large-scale performance and load tests quickly, easily and inexpensively during the building and deployment process. The company serves more than 1,400 customers, which includes Boeing and Thomson Reuters and its solutions allow clients to run huge load tests in the cloud. We believe the association will strengthen the cloud computing business of CA and make it a complete service provider.
Deal Benefits
The company expects to utilize the automation and application security testing (AST) provided by Veracode and expand its DevOps portfolio. Further, the acquisition will broaden CA’s portfolio and enable it to better serve its patrons with a complete solution to address the needs of automation across the enterprise.
Security testing is growing faster and slow testing speed might prove to be a hindrance in getting applications released quickly. Veracode solutions help companies to speed up innovation, improve performance and respond effectively to the evolving competitive market and customer needs. Veracode’s solutions aid companies in managing their software development lifecycle by aligning it with strategic business objectives. Following the acquisition, Veracode will be integrated into CA’s DevOps and Management Cloud business.
According to Ayman Sayed, president and chief product officer of CA Technologies, “This acquisition will unify CA’s Security and DevOps portfolios with a SaaS-based platform that seamlessly integrates security into the software development process. Looking holistically at our portfolio, now with Veracode and Automic, we have accelerated the growth profile of our broad set of solutions.”
This acquisition marks a continuation of CA’s strategy to grow inorganically, striking a balance between making investments for growth and returning cash to shareholders.
Financial Impact
CA expects the acquisition to have a modestly adverse impact on GAAP and non-GAAP earnings per share in fiscal 2018 and fiscal 2019 and be accretive to net income in fiscal year 2020.
The acquisition is expected to increase fiscal 2018 revenues in a band of 1% to 3% as reported and 2% to 4% in constant currency. At Dec 31, 2016 exchange rates, this translates to reported revenues of $4.06 billion to $4.14 billion.
Also, the company expects GAAP operating margins in a range of 26% to 27% in fiscal 2018 and non-GAAP operating margins to be approximately 36%.
Last Words
We remain encouraged by CA’s acquisition strategy, which has enhanced its IT management, software and services portfolio. Moreover, we believe that the breadth of its products and the increased efficiency offered by them will attract customers across sectors, lending stability to its business model.
CA has also adopted a “go to market” sales strategy. This brings together all the commercial functions including sales, marketing, brand management, pricing and consumer insight. The integration of the marketing functions helps to lower costs, thereby improving the bottom line.
Apart from pursuing growth through acquisitions, the company is leveraging cloud computing to enable organizations to source the best components – internal, external, private cloud, public cloud, mobile and more – to construct the most competitive business applications without wasting much time and resource.
The company is also focused on providing advanced management and security software required by organizations to take full advantage of this evolution.
However, CA's shares have returned just 10.9% in the past one year compared with the Zacks categorized Computer-Software industry's gain of 24.6%.
Competition from the likes of Oracle (ORCL - Free Report) , International Business Machines (IBM - Free Report) and HP Inc. (HPQ - Free Report) remain the near-term headwinds.
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
CA Inc. (CA) Signs Deal to Buy Veracode for $614 Million
Information technology (IT) management software company, CA Inc. (CA - Free Report) recently announced that it has inked a deal to acquire Veracode, a Burlington security software company. The all-cash deal worth approximately $614 million is expected to close in the first quarter of fiscal 2018 (subject to customary closing conditions).
About Veracode
Founded in 2006, Veracode offers cloud-based software that helps organisations to run large-scale performance and load tests quickly, easily and inexpensively during the building and deployment process. The company serves more than 1,400 customers, which includes Boeing and Thomson Reuters and its solutions allow clients to run huge load tests in the cloud. We believe the association will strengthen the cloud computing business of CA and make it a complete service provider.
Deal Benefits
The company expects to utilize the automation and application security testing (AST) provided by Veracode and expand its DevOps portfolio. Further, the acquisition will broaden CA’s portfolio and enable it to better serve its patrons with a complete solution to address the needs of automation across the enterprise.
Security testing is growing faster and slow testing speed might prove to be a hindrance in getting applications released quickly. Veracode solutions help companies to speed up innovation, improve performance and respond effectively to the evolving competitive market and customer needs. Veracode’s solutions aid companies in managing their software development lifecycle by aligning it with strategic business objectives. Following the acquisition, Veracode will be integrated into CA’s DevOps and Management Cloud business.
According to Ayman Sayed, president and chief product officer of CA Technologies, “This acquisition will unify CA’s Security and DevOps portfolios with a SaaS-based platform that seamlessly integrates security into the software development process. Looking holistically at our portfolio, now with Veracode and Automic, we have accelerated the growth profile of our broad set of solutions.”
This acquisition marks a continuation of CA’s strategy to grow inorganically, striking a balance between making investments for growth and returning cash to shareholders.
Financial Impact
CA expects the acquisition to have a modestly adverse impact on GAAP and non-GAAP earnings per share in fiscal 2018 and fiscal 2019 and be accretive to net income in fiscal year 2020.
The acquisition is expected to increase fiscal 2018 revenues in a band of 1% to 3% as reported and 2% to 4% in constant currency. At Dec 31, 2016 exchange rates, this translates to reported revenues of $4.06 billion to $4.14 billion.
Also, the company expects GAAP operating margins in a range of 26% to 27% in fiscal 2018 and non-GAAP operating margins to be approximately 36%.
Last Words
We remain encouraged by CA’s acquisition strategy, which has enhanced its IT management, software and services portfolio. Moreover, we believe that the breadth of its products and the increased efficiency offered by them will attract customers across sectors, lending stability to its business model.
CA has also adopted a “go to market” sales strategy. This brings together all the commercial functions including sales, marketing, brand management, pricing and consumer insight. The integration of the marketing functions helps to lower costs, thereby improving the bottom line.
Apart from pursuing growth through acquisitions, the company is leveraging cloud computing to enable organizations to source the best components – internal, external, private cloud, public cloud, mobile and more – to construct the most competitive business applications without wasting much time and resource.
The company is also focused on providing advanced management and security software required by organizations to take full advantage of this evolution.
However, CA's shares have returned just 10.9% in the past one year compared with the Zacks categorized Computer-Software industry's gain of 24.6%.
Competition from the likes of Oracle (ORCL - Free Report) , International Business Machines (IBM - Free Report) and HP Inc. (HPQ - Free Report) remain the near-term headwinds.
CA has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>