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Is CA Getting Its Groove Back?

Buying opportunity or not, I'm getting a bit tired of watching a parade of tech companies report good earnings and reasonable forecasts -- only to see their share prices tank the next day. That's why it's such a welcome sight when enterprise software specialist CA (NYSE: CA  ) does the whole dance backwards.

The company reported $0.13 of GAAP earnings per share, or $0.22 on a pro forma basis, on $1.09 billion in sales. That's up from a $0.04 GAAP loss per share last year on $1.01 billion in revenue. The improvement came from disciplined cost controls, and management expects to grow earnings by another 22% to 28% this year, despite a flattish 4% sales growth curve.

Now, the results were markedly worse than the average Wall Street analyst had expected, thanks to an unexpected tax adjustment that put a $0.04 damper on non-GAAP earnings per share. But the forecast was better! Mr. Market put on his jolly hat and sent the share price up by about 4% today, despite the $0.06 earnings miss per share.

CEO John Swainson thinks that CA's IT management software is "essential to [his] customers' viability" in these times of increasingly complex data centers. Whether the complexity comes from rackfuls of Sun Microsystems (Nasdaq: JAVA  ) blade servers, VMware (NYSE: VMW  ) virtual servers on traditional big iron, or simply from a mishmash of in-house and third-party software solutions to a company's business problems, there's a CA product to help manage the situation.

So that's why Swainson believes in a steady, if a bit stagnant, order flow that turns into stronger profits thanks to more cost controls. Is it enough to stave off competition from the likes of a healthy-looking IBM (NYSE: IBM  ) or a resurgent BMC Software (NYSE: BMC  ) ? I'm not so sure, and neither are your fellow investors in the Motley Fool CAPS community -- CA is a weak one-star stock, in their estimation. If you think they're wrong, just log in and tell us why.

Further Foolishness:

Fool contributor Anders Bylund holds no position in any of the companies discussed here. His professional experience with CA Unicenter left a bad taste in his mouth, but maybe it's better now, five years later. You can check out Anders' holdings if you like, and Foolish disclosure doesn't hold grudges.

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