CA: On-Demand Made Earnings Difference

Enterprise software provider Computer Associates said revenue rose during its fiscal first quarter of 2004 in part because of a new “on-demand” approach to pricing and products it recently rolled out.

Total revenue for the first quarter was $813 million, a 6 percent increase over total revenue generated in the first quarter of fiscal year 2003.

The Islandia, New York-based maker of enterprise software systems, said net income was $10 million for the quarter, (or an estimated 14 cents per share) compared to a $65 million loss in the same time a year ago.

Sanjay Kumar, CA chairman and chief executive officer, said on a GAAP (Generally Accepted Accounting Principles) basis, the company returned to profitability, helped by its new “On Demand” enterprise management software that rolled out during the quarter.

The software suites are sold on a subscription basis. The company said deferred subscription revenue was 16 percent higher on an annualized contract value basis and 20 percent higher than last year on a total contract value basis. Kumar said the increases were a strong reflection of the company’s FlexSelect licensing model.

CA recently unveiled its own foray into on-demand with its Unicenter line of products, which it calls “Managing On-demand Computing.” (CA’s enterprise management products, such as BrightStor for storage, help IT professionals monitor their network’s varying applications that operate across a sprawling set of computing platforms.)

The latest Unicenter products consist of modules that are designed to help customers “dial-in” as much network management resources as they need, instead of deploying extensive overhauls of IT structures.

The idea is to offer integrated applications that help clients manage heterogeneous infrastructure, provide self-management/self-healing capabilities within the applications, and create service-oriented
architecture that radically simplifies operations for IT staff. Perhaps the biggest change in CA’s on-demand offering is its flexible licensing model, which CA calls “FlexSelect Licensing.”

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