CA Technologies' turnaround remains a work in progress

CA Technologies' turnaround remains a work in progress

Summary: The company's job will be to convince a bevy of analysts and shareholders that CA's plan to restart growth is a good one.

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CA Technologies' transition to be more innovative and grow remains a work in progress as the company's outlook for fiscal 2015 was mixed and CEO Mike Gregoire acknowledged "revenue is still not where we like it to be."

The company's job on Thursday will be to convince a bevy of analysts and shareholders that CA's plan to restart growth is a good one.

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To set up CA's strategic overview, the company delivered fiscal fourth quarter results that were a bit better than expectations.

The company reported net income for the fourth quarter of $104 million, or 23 cents a share, on revenue of $1.1 billion, down 3 percent from a year ago. Non-GAAP earnings were a penny better than expectations at 61 cents a share.

As for the outlook, CA said it expects 2015 revenue to fall 1 to 2 percent to be in a range of $4.43 billion and $4.49 billion. Non-GAAP earnings are expected to be $2.45 a share to $2.52 a share. Wall Street was expecting fiscal 2015 non-GAAP earnings of $2.56 a share on $4.47 billion.

CA CFO Richard Beckert said the company has improved its fundamentals and is seeing renewals in the low to mid 90 percent range. The mainframe business is also holding its own, but CA's enterprise applications business "remained inconsistent across most geographies and product lines."

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The larger question is where CA Technologies is headed. In its investor day presentation, CA's message was that it could expand its market and ultimately innovate.

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The key takeaway in that chart from CA is that its future growth depends on the enterprise solutions unit, which is sputtering at the moment. CA's mainframe business is expected to remain static — even though the company will have to run faster to keep it that way — and executives noted that IT application management is increasingly becoming a business intelligence tool. All that is true, but the question is whether CA can fend off new entrants like AppDynamics and ServiceNow that are encroaching on the company's turf.

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CA's other challenge will revolve around marketing. The company outlined how it plans to position the new CA around the concept that every business runs on software — a theme most players in the space are trying to hit.

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Topic: Enterprise Software

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