CA Delays Q4 Earnings Report Again
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CA today said it is delaying its fourth quarter and full fiscal year 2006 earnings report, the second time the management software maker has pushed back its earnings report for the quarter.
The Islandia, N.Y., company said in a statement the latest delay is due to additional work that needs to be completed on sales commission expense and income taxes.
CA, which hoped to unveil Q4 earnings after the market closed today, now expects to reveal the final results when it files its annual report.
The company, struggling to shake off a major corporate accounting scandal that resulted in the resignations of top executives and guilty pleas on fraud charges; did reaffirm Q4 guidance.
CA said Q4 sales would be $947 million, in line with the updated guidance of $940 million to $950 million, but below its prior expected range of $975 million and $1 billion.
The company, which competes with IBM, Microsoft and HP in the market for software that manages changes in computer systems, also expects to lose 7 cents per share for Q4 compared to its previous estimate of zero to 2 cents per share loss.
CA expects commissions and royalties for the fiscal year will be $387 million, which includes approximately $70 million more in sales commissions than originally expected.
CA attributed the increase in sales commission expense to a new sales commission plan that did not properly align commission payments with the company's performance.
The vendor also noted that it will restate its earnings for the third quarter of fiscal 2006 to reflect approximately $26 million of additional commission expense that should have been recorded in the company's third fiscal quarter.
"Clearly we are disappointed that what would have been a solid year was impacted by execution issues relating to commissions, which adversely affected our fourth quarter performance and led to a restatement of our third quarter results," said CA CEO and President John Swainson.
Swainson said CA is making changes to ensure that these problems do not recur.
Shares of CA fell $1.14 on the news at the New York Stock Exchange's open this morning, settling around $21.38 in late morning trading.
The Q4 earnings delay comes two weeks after the departure of CFO Robert Davis and the first Q4 earnings delay.
CA attributed the first snag to weak product sales, as well as poor forecasting of acquired companies' results.
The vendor is attempting to battle back from the notorious "35-day month" accounting scheme perpetrated by former CEO Sanjay Kumar and his lieutenants.
Kumar and former CA sales head Stephen Richards pleaded guilty to fraud last month, but CA is still feeling the sting.
While the company has made some major acquisitions and shown other signs of vigor under former IBM executive Swainson, CA has watched several company executives come and go for various reasons.