CA To Shed 800 Employees As Profits Surge - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News
News
7/27/2005
06:32 PM
50%
50%

CA To Shed 800 Employees As Profits Surge

Even though it reported good financial results for the quarter, Computer Associates said it is laying off 5% of its workforce to help reduce costs.

Computer Associates International plans to terminate 800 employees worldwide.

The workforce reductions, which represent 5 percent of CA's total employee headcount, are part of a restructuring plan to save about $75 million on an annualized basis, executives of the Islandia, N.Y., software vendor said Wednesday.

CA announced the restructuring as it reported earnings for the first fiscal quarter 2006. The current layoffs follow a similar workforce reduction in September 2004.

For its first quarter, which ended June 30, 2005, the vendor earned $94 million, or 15 cents a share, on revenue of $920 million. That's a 135 percent increase over the $40 million in earnings CA reported for the same quarter a year ago, when it earned 7 cents a share on revenue of $850 million.

The year-over-year improvement in earnings is marked with an asterisk, because CA's first quarter fiscal 2005 results have been restated in order to comply with FAS123(R), according to CA. FAS123 is a new reporting standard that requires public companies to expense the cost of stock options, effectively taking away the ability to offer employee compensation without factoring it into financial statements.

Compliance costs drove CA's expenses up during the quarter while its bookings from direct and indirect sales fell sharply, the vendor said.

Sarbanes-Oxley and legal costs pushed first quarter expenses to $834 million compared to $785 million for the same quarter a year ago. First quarter bookings from both direct and indirect sales fell 30 percent compared to the same period last year, according to CA.

John Swainson, president and CEO, said the first quarter results demonstrated that "CA is very much a work in process."

Swainson blamed sluggish sales on a competitive market environment where rival vendors engaging in product "bake offs" made customers less willing to commit fully to CA products, and more inclined to sample technology solutions before entering into larger deployment contracts.

Swainson said he was confident that the launch of Unicenter release 11, the next upgrade of CA's flagship product, would spur sales when released later this year.

COO Jeff Clarke added that for CA, the first quarter is "seasonally slow" and typically accounts for only about 14 percent of CA's yearly business.

The 800 layoffs CA announced as part of its second restructuring plan this year should be completed by the end of the calendar year, according to CA. Executives did not elaborate on which departments would be effected. CA will take a pretax charge ranging from $50 million to $75 million in the current fiscal second quarter for severance and other related costs, the Islandia, N.Y., company said.

CA just came off a rough fiscal year 2005, during which it suffered a 60 percent drop in earnings compared to the year before.

The vendor raised its second quarter revenue guidance to about $960 million.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of Cloud Computing - Fall 2020
The State of Cloud Computing - Fall 2020
Download this report to compare how cloud usage and spending patterns have changed in 2020, and how respondents think they'll evolve over the next two years.
Commentary
Why 2021 May Turn Out to be a Great Year for Tech Startups
John Edwards, Technology Journalist & Author,  2/24/2021
News
How GIS Data Can Help Fix Vaccine Distribution
Jessica Davis, Senior Editor, Enterprise Apps,  2/17/2021
Slideshows
11 Ways DevOps Is Evolving
Lisa Morgan, Freelance Writer,  2/18/2021
Register for InformationWeek Newsletters
Video
Current Issue
2021 Top Enterprise IT Trends
We've identified the key trends that are poised to impact the IT landscape in 2021. Find out why they're important and how they will affect you.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll