CA profits up sharply; sales dip

Software maker CA Technologies said net income in

Software maker CA Technologies said net income in its fiscal first quarter climbed 40 percent to $335 million, or 73 cents per share, in the three months that ended June 30, 2013. (Credit: Handout)

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Software maker CA Technologies, Long Island's largest company by stock market value, reported lower quarterly sales Wednesday but said profits jumped sharply, thanks in part to a tax refund.

The company, which sells mainframe, security and other software to large corporations, said net income in its fiscal first quarter climbed 40 percent to $335 million, or 73 cents per share, in the three months that ended June 30, compared with the same period last year. Sales dipped 1 percent, to $1.13 billion.

"We did better than expected on the revenue line and were able to capitalize on organizational efficiencies, expense management and a tax benefit to drive earnings growth," said CA chief executive Mike Gregoire, who took over the company in January.

The results beat the expectation of analysts, who had predicted sales of $1.104 billion. CA released its earning after the stock market closed. The company's stock climbed less than 1 percent in after-hours trading, to $29.92.

CA's falling sales were offset by a $181-million tax benefit, primarily from a successful appeal in May to the Internal Revenue Service for the years 2005 to 2007. The move boosted earnings per share by 41 cents.

The company's revenue has dipped in each of the last five quarters. To reverse that trend, Gregoire said CA needs to look beyond its core mainframe businesses and become faster and more innovative.

During a call with analysts, Gregoire said the company was more than halfway finished with the $150 million reorganization CA announced in May. The effort includes consolidating research-and-development locations to 40 sites, down from 81, and cutting roughly 1,200 workers.

Most of those employees will be replaced, and CA is actively recruiting "engineering talent with the skills to increase the rate and pace of organic development," Gregoire said.

The stock market value of Islandia-based CA is roughly $13.54 billion. As of May, it had about 1,525 employees on Long Island and close to 14,000 employees worldwide.

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