* Q3 adj EPS $0.65 vs est $0.54
* Q3 rev $1.26 bln vs est $1.21 bln
* Ups FY12 outlook for adj EPS and rev
* Hikes annual dividend
* Shares rise 18 pct after market
(Adds CEO comments from conference call, analyst comments;
By Siddharth Cavale
Jan 24 Business software maker CA Inc
posted quarterly results above Wall Street estimates on
stronger subscription revenue, raised its full-year outlook and
boosted its annual dividend, sending its shares up 18 percent in
"The numbers were solid (in the quarter) but the bigger
surprise was the timing and the magnitude of the dividend
increase," Kirk Materne, analyst with Evercore Partners, told
CA announced plans to return about 80 percent of its free
cash flow to shareholders through fiscal 2014 by raising its
annual dividend five folds to $1.00 per share. It also said it
would repurchase up to $1.5 billion of common stock.
"(The dividend increase) just opens up a new potential
investor base for CA...and the new dividend yield is going to
create new floor for the shares," Materne said.
The company also said it continues to expect over three
years an acceleration to mid-single digit constant currency
organic revenue growth and non-GAAP operating margin expansion
of 100 basis points annually.
"Our expectation is that over time much of this operating
margin expansion will come from improvements in execution and
our enterprise solution segment," William McCracken, CA's chief
executive, said on a conference call.
McCracken also said the company could make acquisitions
outside North America.
During the third quarter, enterprise solutions revenue rose
11 percent in constant currency to $478 million.
CA has anticipated in its strategic plans acquisition
activities in the range of $300 million to $500 million per year
on average through fiscal 2014.
"They are likely to remain focused on areas like Cloud and
virtualization, it's likely they will increase their stand there
(for acquisitions)," Oppenheimer analyst Shaul Eyal told
The company, which makes software to manage large computer
networks, raised its outlook for fiscal 2012. It now sees
adjusted earnings of $2.21 to $2.25 per share, on revenue growth
of 6 percent..
Third-quarter earnings rose to $206 million, or 54 cents a
share, from $200 million, or 39 cents a share, a year ago.
Revenue of $1.26 billion beat average analyst estimates on
subscription revenue growth of 4 percent boosted by a single
license payment, which contributed 3 percentage points to
CA shares rose to $26.60 in extended trading on Tuesday.
They closed at $22.82 on the Nasdaq.
(Reporting by Siddharth Cavale in Bangalore; Editing by