CA Inc. raises annual dividend fivefold

Islandia-based CA Inc., which makes business software, posted higher quarterly profits Tuesday and -- just two weeks after public needling by an activist hedge fund investor -- said it would increase its dividend five times over.

CA, one of Long Island's largest publicly traded companies, said third-quarter profit rose 32 percent to $263 million, from $200 million in the same October-to-December period a year ago.

Sales rose 10 percent year-over-year to $1.26 billion.

The results, which were buoyed partly by a $39-million customer licensing payment that came in earlier than expected, beat Wall Street expectations.

CA, which employed 1,600 on Long Island as of its March 31, 2011, annual report, said its board approved an increase in the annual dividend from 20 cents to $1 per share and more than $1.2 billion in new stock repurchases, which seek to increase CA's share price, through fiscal 2014.

CA's stock rose more than 10 percent in in early trading Wednesday.

Earlier this month, Manhattan hedge fund Taconic Capital Advisors, which owns 5.1 percent of CA's shares, urged the company to share more cash and increase margins after a flurry of acquisitions.

On a conference call with analysts, company officials also pledged to continue spending on acquisitions -- at a rate of about $300 million  to $500 million annually through 2014.

Spokesman Bill Hughes said the company indicated as early as an investor meeting last July that it intended to return more cash to shareholders -- and denied that Taconic's intervention had an impact. "We have a lot of shareholders, and we have a lot of conversations with shareholders," Hughes said.

Sanford Bernstein analyst Mark Moerdler said investor pressure on the company to increase profit margins and distribute cash to shareholders has been growing. "There's been pressure for a while at the financial analysts' meetings, from a number of investors," Moerdler said. "I'm sure Taconic lit an additional light under them."1