CA looking good to confused analysts

NEWS Due to changes in its accounting policies, it is now difficult to compare current performance with previous quarters and years. However, analysts believe the company is doing well and, after an initial fall, shares bounced back to $35.5 following the results. Robert Johnson, analyst at ABN/Amro in New York, said: "I think that they will do quite well. But now they're offering customers a choice in payment plans, you can't evaluate their figures - you can't compare apple to apple. I believe the new system is quite conservative." CA has changed accounting procedures to take income from sales and licences in increments, spread over the period of the contract rather than recording one big hit at the signing of the contract. It has also encouraged sales staff to go for shorter-term contracts. Tony Lock, senior analyst at Bloor Research, said: "Now they've changed their accounting it makes it hard to figure out how they're doing financially. This will continue for the next two quarters, at least. Earnings per share are up, and this is a reasonable indication that they're doing OK." CA reported third quarter income of $247m, or 42 cents per share, on sales of $1.4bn. ABN/Amro's Johnson added that sales of mainframe software appear to have started to rise after bottoming out early last year, and new products, particularly from the Sterling Software acquisition, are doing well. Lock pointed out that it has always been difficult to assess CA because a long series of acquisitions means that 'the organisation is never the same from one quarter to the next.' The company's losses, therefore, must be at least partly due to acquisition costs working through.