CA posts Q2 loss on restitution charges

Computer Associates International reported a six percent increase in revenue during its second fiscal quarter, but posted a $94 million loss after paying to settle government investigations into the company, it said Wednesday.

The Islandia, New York, company recorded $218 million in charges to create a restitution fund that would compensate shareholders who were affected by the U.S. government’s investigation into accounting improprieties at the management software company. This fund was also used to “assist the government in obtaining executive disgorgement,” CA said in its release, alluding to the departures of several high-profile executives including former Chief Executive Officer Sanjay Kumar.

CA had warned investors about the charges earlier this month when it updated its second-quarter earnings forecast. At the time, the company said it expected to meet or exceed its earlier target of $830 million to $850 million in revenue. The company followed through on that promise by recording $855 million in revenue during the quarter, ended Sept. 30. This was an increase of six percent over the $803 million in revenue recorded during last year’s second quarter.

Bookings increased by 70 percent compared to last year’s second quarter to $690 million. Services revenue increased by 7 percent in the quarter as the company improved its execution, it said.

The $94 million loss is wider than the $90 million loss recorded in last year’s second-quarter. CA had actually expected to lose more than that figure, as it told investors to expect a $0.23 per share loss for the second quarter. A $94 million loss worked out to a per-share loss of $0.16.

CA expects to make money in its third fiscal quarter, the company said. Earnings per share based on generally accepted accounting principles should be between $0.06 and $0.07, it said. Third-quarter revenue should fall between $850 million and $865 million, the company said.