Fool.com: Computer Associates Gets E-business Boost (Breakfast News) October 20, 1999

BREAKFAST WITH THE FOOL

Wednesday, October 20, 1999

"Don't wait for your ship to come in; swim out to meet it."
-- Anonymous

Computer Associates Gets E-business Boost

By Richard McCaffery (TMF Gibson)

Network management software vendor Computer Associates (NYSE: CA) reported solid results in a tough quarter for enterprise software vendors as year 2000 concerns kept many firms from making major software purchases.

But growth of the Internet is prodding purchases of software that backs up e-business applications, and this helped Computer Associates beat analyst estimates by a penny.

Net income for the Islandia, New York company jumped 15% to $334 million, compared to $294 million a year ago, and diluted earnings per share (including acquisition-related amortization expenses) increased to $0.60 per share, up from $0.52 a year ago. Sales grew 32% to $1.6 billion.

The strong quarter also provides evidence that the company has made progress toward easing Platinum Technology into the fold. In March, Computer Associates announced a plan to buy Platinum for $3.5 billion in cash, making it the largest acquisition in its history and one of the biggest ever in the software industry. Platinum is a worldwide manufacturer of knowledge management, database, and application management software. It also has a worldwide stable of consultants.

After getting hit hard by the economic downturn last fall and seeing its stock drop to a 52-week low of $32 1/8 around the time of the Platinum deal, Computer Associates stock started moving up again. It closed yesterday at $54 1/2, up 31% for the year.

New customers during the quarter include DirecTV, owned by Hughes Electronics (NYSE: GMH), Softbank, eToys (Nasdaq: ETYS), and Digex (Nasdaq: DIGX).

News to Go

Enterprise hardware, software, and services firm Sun Microsystems (Nasdaq: SUNW) is expected to announce today the purchase of a European software firm, according to Reuters.

Earnings at enterprise resource planning software vendor SAP (NYSE: SAP) fell 64% in the third quarter as licensing fees in the United States, Japan, and the United Kingdom slowed.

Customer relationship management software vendor Siebel Systems (Nasdaq: SEBL) reported net income of $0.27 per share, up 93% from $0.14 a year ago and ahead of estimates by $0.02 per share.

Swimwear company Authentic Fitness (NYSE: ASM) has hired a financial adviser to review an acquisition offer from The Warnaco Group (NYSE: WAC) for $20.50 in cash, a 4% premium to the company's closing price of $19.63 yesterday.

More Foolishness

David Gardner talks broadband... At the Fool, learning is fundamental. Selena Maranjian gives a tour of what The Motley Fool offers... Warren Gump examines Whole Foods' Internet moves... AT&T isn't your mother's Ma Bell any longer -- Bill Mann looks at its busy offspring.


Remember to start each business day with Breakfast With the Fool at 9 a.m. Let us know what you think of this feature. Send all comments and suggestions (including Foolish quotes) to the Breakfast Fools.