CA warns on profit view, to cut 1,000 jobs; shares fall

BANGALORE (Reuters) - Business software maker CA Inc (CA.O) warned its full-year profit would be at the low end of its forecast, and said it would cut 1,000 jobs, or about 8 percent of its workforce.

Shares of the company fell as much as 6 percent in morning trade but recovered some of those losses to trade down 3 percent at $23.18 Tuesday on Nasdaq.

The warning implies that the company's profit forecast of $1.60 to $1.71 a share, issued in October 2009, will fall short of analysts' current expectation of $1.69 cents a share.

The company, which makes products that help manage large computer networks, said it will take a pretax charge of about $50 million related to the job cuts.

The charge, a majority of which will be incurred in fiscal 2011, includes severance costs of about $47 million and global facilities consolidation costs of about $3 million.

"We are taking the necessary steps to further align our organizations and skills with CA's strategy, rationalize our product portfolio and continue to increase efficiencies," said Chief Executive Bill McCracken, who took over the reins in January, in an e-mail to employees.

McCracken said most of the job cuts would be in North America.

The company expects to complete the restructuring by the end of the second quarter of fiscal 2011, it said in a regulatory filing.

"We believe CA missed consensus earnings per share expectations primarily due to expenses as opposed to revenue," Credit Suisse analyst Philip Winslow said in a note to clients.

The analyst continues to believe that CA struggles to grow revenue organically.

As orders slowed during the financial crisis, the company made several acquisitions since 2009 to grow its businesses. Most recently, it acquired privately held Nimsoft Inc for $350 million in an all cash deal.

"While we have maintained a positive view of the changes that CA's management has enacted ... we await evidence of improved organic growth or a more balanced acquisition/revenue growth/margin expansion strategy before turning positive on CA's stock," said Winslow, who has a "neutral" rating on the stock.

(Reporting by Shrutika Verma in Bangalore; Editing by Anne Pallivathuckal, Saumyadeb Chakrabarty)