Strong Earnings at CA Technologies

For the first time ever, the Dow closed above 15,000. This was the 17th-straight Tuesday rally for the index. The Dow closed today at 15,056.20. The S&P 500 rose 0.52% to close at 1,625.96. This was also another all-time high close.

The cyclicals once again led today’s rally. Interestingly, the tech-heavy Nasdaq was only up 0.11% today while the Nasdaq 100 was slightly negative.

Our Buy List did well today thanks largely to DirecTV ($DTV). The good earnings report propelled the shares to a 6.9% gain today. Bed Bath & Beyond ($BBBY) finally broke through $70 per share today. That hasn’t happened since September.

After the bell, CA Technologies ($CA) reported fiscal fourth-quarter earnings of 68 cents per share. This was well above Wall Street’s forecast of 55 cents per share.

“While we were able to achieve GAAP and non-GAAP diluted earnings growth for the year, we know we can do better to drive new sales and revenue performance,” said Mike Gregoire, CA Technologies chief executive officer. “When I look at the significant assets at CA Technologies, I believe there is an opportunity for us to improve our performance by stronger focus on product innovation, leveraging customer relationships and better execution in new customer adoption.

“The traditional ways we’ve looked at systems, data, applications and security are being challenged by disruptive technologies like Mobility, Cloud, SaaS and Big Data. Businesses have higher expectations from IT, demanding far greater speed and agility and anytime, anywhere secure connectivity. These are areas where CA has expertise and can help,” he continued. “To better meet this customer demand, today we announced a plan and corresponding charge of approximately $150 million for fiscal year 2014 that will enable us to rebalance our resources to drive greater innovation and collaboration in product development and greater efficiency and better sales execution.”

For 2014, the company expects to earn between $2.35 and $2.43 per share. Wall Street had been expecting $2.53 per share, and the stock is down after-hours. However, I’m not sure if CA’s forecast includes the $150 million charge mentioned above. By my calculation, that’s 33 cents per share pre-tax.

Posted by on May 7th, 2013 at 10:44 pm


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