Shares of CA Inc., the business-technology services provider in talks with an activist investor, surged in late trading after the company reported earnings that beat analysts’ estimates and increased dividends and share buybacks.
CA shares gained 18 percent to $26.96 at 4:50 p.m. New York time. Earlier they closed up 1.7 percent to $22.82. The stock fell 17 percent in 2011.
Income from continuing operations rose 34 percent to $263 million, or 54 cents a share, from $196 million, or 38 cents a year earlier, the company, which operates as CA Technologies, said Tuesday in a statement. Excluding some items, profit was 65 cents, beating the 54-cent average estimate of analysts surveyed by Bloomberg.
Revenue rose 10 percent to $1.26 billion, exceeding analysts’ $1.21 billion estimate. Chief Executive Officer Bill McCracken has spent about $1.8 billion on acquisitions in recent years as he seeks to lessen the Islandia, New York-based company’s dependence on mainframe products and expand in technology security and management, including cloud software.
For the fiscal year ending March 31, CA said sales will rise 6 percent, the high end of its prior range. The company raised its forecast for adjusted earnings to $2.21 to $2.25 from $2.13 to $2.18.
CA Technologies will return $2.5 billion to shareholders by March 31, 2014, by increasing its annual dividend to $1 from 20 cents, and repurchasing $1.5 billion of stock, including about $230 million remaining under its existing authorization.
Taconic Capital
“We are not done,” he said. “We remain focused on continuing to execute on our strategy and making further operational enhancements including driving new product sales and increasing sales productivity.”
Mainframe solution sales rose 9 percent. Enterprise software climbed 12 percent, and services gained 17 percent.
Hedge fund Taconic Capital Advisors LP said Jan. 11 it acquired a 5.1 percent stake in CA Technologies, and is in talks with management to boost returns. Taconic said the company could pay out more cash to shareholders, implement a more efficient capital structure and increase profitability in its enterprise solutions division.
Taconic was co-founded by Kenneth Brody and Frank Brosens and has offices in New York and London. The company has boosted profit every year since 2008, while its stock has fallen 16 percent during that span. Last year was the first time CA boosted its dividend in six years, according to data compiled by Bloomberg.
The company was formerly known as Computer Associates Inc.
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