CA Inc.CA

Morningstar Rating

Stock Research and Analysis

by Rafael Garcia

We believe CA, formerly known as Computer Associates, has left its tarnished past behind. Investors attracted to a slow but steady cash-flow generator should consider CA for the long term. However, while a narrow economic moat protects the company's Read more

Bulls Say

CA has taken steps to attract a new and experienced management team with appropriate incentives to improve long-term shareholder value. Moreover, the firm has significantly improved its accounting practices and corporate governance.

While the economic environment has forced organizations to tighten their IT budgets, a late 2009 poll conducted by IT research firm IDC showed that nearly 50% of the surveyed organizations planned to increase their investments in mainframe environments.

Management's initiatives to maintain CA's mainframe products should enable the company to retain a solid presence in this market.

The company has a large and diversified customer base, with more than 99% of Fortune 1000 companies as clients. Read more

Bears Say

A significant proportion of CA's revenue comes from the mainframe market, whose growth is unlikely to exceed the low single digits.

Providers of free systems management solutions--such as SpiceWorks-- limit CA's opportunity to expand into the small- and medium-size business segment of the market.

While CA's primary market is the top IT organizations, the company sells products such as antivirus solutions to individual clients. This segment has been hit hard by the economic recession and may result in a distraction for management.

New sales opportunities may be hampered by lingering unfavorable perceptions about CA's long list of past misdeeds. Read more

Strategy

CA's operations are organized around its enterprise IT management strategy, which aligns the firm's disparate product portfolio--the result of an acquisitive past--into an integrated and modular platform. Read more

Management

John Swainson, who spent 30 years with IBM before joining CA in 2004 and becoming its CEO a year later, has been instrumental to the firm's successful turnaround. He assumed the company's leadership after an accounting fraud in 2004 pushed CA to a near-death Read more

Profile

CA (formerly Computer Associates) is one of the largest independent providers of IT management software. Revenue from its core mainframe segment represents about 60% of Read more

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