Once known as Computer Associates, CA Technologies is moving toward becoming known as Computer Apps. One of the world's largest software companies, CA provides tools for managing networks, databases, applications, storage, security, and other systems. Primarily serving large enterprises, its applications work across both mainframes and distributed computing environments. It current focus is on developing applications for cloud and mobile computing, security, and DevOPs (development operations). Most of its software license sales come from subscriptions (primarily 3- to 5-year terms). The company also offers consulting, implementation, and training services. It sells worldwide to businesses, government agencies, and schools directly and through various resale channels.
The company's products are divided into two software segments -- mainframe and enterprise -- while services are broken out into a third. Mainframe software accounted for about 55% of sales. Enterprise products were about 37% of sales with services filling in the rest of the revenue.
In 2014 (ended March) the US remained the company's largest single geographic location by revenue, accounting for almost 60% of total sales. Europe accounted for about a quarter of CA's revenue during 2014.
CA continues to expand its reach to organizations in areas that offer growth opportunities. These include Asia, Eastern Europe, and Latin America. The company remains specifically focused on Brazil, China, India, Mexico, and Southeast Asia, where new technologies are key to business development.
Sales and Marketing
As a software powerhouse, CA maintains partnerships with equally powerful industry leaders, including systems integrators such as Accenture and PricewaterhouseCoopers, as well as managed services providers, including HP and IBM. It maintains partnerships with other technology and software companies to ensure the interoperability of its products with offerings from such companies as Microsoft, SAP, and VMware. CA increased advertising spending almost fourfold in 2014, reaching $38 million.
CA's revenue dropped almost 3% in 2014 to $4.51 billion from $4.64 billion in 2013, the company’s third straight year of revenue decline. Lower sales of enterprise products in 2014 and in previous years rippled through to reduce revenues by 2% from subscription and maintenance, the company’s biggest source of revenue. There was also a $37 million impact from an unfavorable foreign exchange effect in 2014.
CA’s net income dropped in 2014 for the first time in seven years. The company posted a profit of $914 million, off about 4% from $955 million posted in 2013. CA increased spending on product development by about $98 million in 2014 and had increases in other expenses for the year.
Cash flow from operations dropped below $1 billion in 2014 for the first time in at least five years. It dropped to $997 million for the year from $1.4 billion in 2013 with the lower net income and higher deferred income taxes, expenses for share-based compensation, and other items.
CA, along with its many of its enterprise computing peers, is focusing its resources on developing software or – in the current parlance – applications for cloud and mobile platforms, providing security, and DevOps, which helps software designer and IT personnel work together. In the meantime, the company carried out a restructuring plan, called Fiscal Plan 2014. CA eliminated about 1,800 jobs and planned to hire hundreds of employees with the skills needed to carry out its strategy. It consolidated about 80 percent of its enterprise resources at 10 locations in order to generate collaboration that it hopes lead to new products.
CA has released new products aligned with its strategy. CA Management Cloud for Mobility is a product portfolio to help companies manage and secure devices, content, and applications. CA Nimsoft Monitor Snap is a free version of the CA Nimsoft Monitor product, which monitors and manages a customer’s IT resources. Cloud Storage for Systems z is a technology designed to help customers reduce the cost of storing data processed on IBM System z by backing up the data and storing it in the cloud. CA has partnered with Microsoft to make the technology available for customers who use Microsoft’s Azure cloud.
To develop more products, CA has product development facilities. The CA Silicon Valley Technology Center in Santa Clara, California opened in October 2103. It brings together research and development for cloud, Software-as-a-Service, mobility, and big data. A new research center in Bangalore, India will work on mobility, digital payments, big data, data science analytics, and advanced analytics.
To narrow its focus, CA has moved to sell parts of its business that no longer fit its strategy. It agreed to sell its CA arcserve data protection business to Marlin Equity Partners. But CA scuttled a deal to sell its CA ERwin Data Modeling business to Embarcadero for fear it wouldn’t receive approval from regulators fast enough to meet the terms of the deal.
Mergers and Acquisitions
Historically an aggressively acquisitive company, CA continues to expand its application portfolio with strategic purchases.
In 2013 CA completed the acquisition of privately-held Layer 7 Technologies, a leading provider of Application Programming Interface (API) security and management. The acquisition of Layer 7 enables CA to provide leading security and management technology to the API marketplace.
Also in 2013, the company acquired Nolio, a provider of application service automation software, for about $42 million. Placed in CA’s DevOps business, Nolio software is designed to move application software from development process through production across physical, virtual, and cloud IT environments.