Stock Option Advisory

Computer Associates (CA) Intl. Inc. Q4 Revenue up 8%

Islandia, NY based Computer Associates International Inc. (CA) is one of the world’s largest independent software companies. They provide information technology management software worldwide. Their solutions include CA Project & Portfolio Management, which provides views into an organization’s investments, initiatives, and resources.

Recent reports announced another solid quarter with the company making significant progress. Fourth quarter revenue is up 8 percent to $1.085 billion with fourth quarter GAAP earnings from continuing operations per diluted common share increases to $0.13 from $(0.04). Fourth quarter non-GAAP operating earnings per diluted common shares are up 10 percent to $0.22.

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Fourth quarter cash flow from operations is up 32 percent to $690 million compared with $521 million in the fourth quarter of fiscal year 2007 and the company issues fiscal year 2009 guidance for cash flow from operations of $1.15 billion to $1.18 billion, a year-over-year increase of 4 to 7 percent.

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Total North American revenue was up 2 percent in the fourth quarter while revenue from international operations was up 16 percent, or 3 percent on a constant currency basis, compared with the same period last year.

One reason investors get excited about certain stock symbols is the potential for ongoing income from owning the stock. Computer Associates International’s total product and services bookings in the fourth quarter were $1.468 billion, up 30 percent compared with $1.133 billion reported in the prior year period. This offers a great value for long-term traders.

For the full fiscal year, total product and services bookings were $4.537 billion, up 15 percent from the $3.938 billion reported in the 2007 fiscal year. During the year, the Company signed 61 license agreements greater than $10 million, for a total of about $1.4 billion, compared with 42 license agreements totaling about $1.1 billion in fiscal year 2007. The weighted average of direct bookings in fiscal year 2008 was 3.22 years, compared with 3.29 years in the prior fiscal year.

The Company reported fourth-quarter GAAP income from continuing operations of $71 million or $0.13 per diluted common share, compared with a loss of $20 million or ($0.04) per diluted common share a year earlier. For the full year, GAAP income from continuing operations was $500 million, or $0.93 per diluted common share, compared with $121 million, or $0.22 per diluted common share in fiscal 2007.

They are continuing to focus on direct sales and their partnerships with existing customers. They also centered their attention on selling new software licenses to new and existing customers, which produced double-digit bookings growth for the year. They continue to advance on expense management, with large improvements in operating margins.

2007. The Company reported full year non-GAAP operating expenses of $3.177 billion, up slightly from the $3.160 billion reported in the prior year. Excluding the negative impact of currency, non-GAAP operating expenses were down 3 percent year-over-year.

Both GAAP and non-GAAP income from continuing operations were affected by several discrete tax charges in the fourth quarter, which reduced full-year GAAP earnings per share by 2 cents per share and non-GAAP earnings by 6 cents per share. In addition, GAAP earnings per share in the fourth quarter were reduced by 4 cents due to increased restructuring expenses.

Covered calls can be a good method of making income on stocks. For example, a covered call investing position for CA could be entered with a potential of making 2.7%. The corresponding call option is CAGE, which is a July call option with a $25 strike price. Additionally, the covered call investing position on CA has downside protection of 5.1%, meaning as long as the stock price declines less than 5.1%, the position will be profitable at expiration.

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[tags] Islandia, NY, GAAP, CA, Computer Associates Intl. Inc., covered call investing, covered call strategies, investing in stock options, poweroptions, stock investing, stock market help, stock market investment strategies, stock options, stock symbols [/tags]

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