CA to Support StratITsphere Cloud

Information innovation and management software developer, CA Inc. recently revealed that its cloud computing, energy management and service assurance solutions will support StratITsphere's new package of cloud-based services and other offerings.

This should help StratITsphere's Fortune 1000 clients who would be able to access dynamically provisioned and secure cloud services, providing an agile and highly efficient platform with a lower capital investment than traditional computing solutions.

The company is slowly tapping the huge possibility available in the cloud computing space. CA Inc.'s emerging possibility in the virtualization/cloud computing space is significant and could help accelerate growth over the then 2-3 years. CA believes that 2011 will be crucial as the company seeks to establish itself as a beneficiary of virtualization/cloud computing.

The company's recent acquisition of the cloud computing company Oblicore Inc. is as well an indication of its focus on the cloud computing business. Cloud computing is witnessing strong demand and is being increasingly adopted by not just the small and medium businesses, however also large players.

Moreover, CA Inc.'s record management business is poised for growth. The company's Records Manager, part of its comprehensive Information Governance solution, automates the record-keeping processes to help users gain faster access to information, save resources and facilitate compliance with regulatory, legal and business requirements. Gartner estimates that the worldwide records management market will see a five-year compound annual growth rate of 12% between 2009 and 2014.

CA Inc. posted modest fourth quarter results, with EPS in line with the Zacks Consensus Estimate, though revenues missed. But, the demand trend noticed in the quarter was encouraging. Keeping in mind the quarter's revenue backlog, we find the fiscal 2012 guidance a bit conservative. We think that CA Inc.'s endeavor to return shareholder value with share buybacks and dividend increases could boost investor sentiment.

The other hand

On the other hand, we are a bit concerned about the intense competition in the software & cloud computing space from big players, just as International Business Machines and Hewlett-Packard Company. This apart, its high debt balance and European exposure remain headwinds going forward.

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