IBM International Business Machines Corp

Computing major CA Technologies (CA) recently won a deal from the Swift Exchange, which selected the CA SiteMinder to improve the security and accessibility of its loyalty program commerce system, which is also called Swift Exchange.

It is expected that the single sign-on, flexible authentication, policy-based authorization, and improved scalability, reliability and availability would increase the efficiency of the new Swift Exchange system, thereby reducing its cost of operation.

However, CA is not limiting itself to the enterprise segment. The company is also focused on innovation for the education sector, which is showing some promise. To tap this opportunity, CA is hosting an education show, which it called May Mainframe Madness 2012 (MMM 2012), a free, virtual trade show delivering educational presentations to customers around the globe throughout the month of May.

This apart, CA has made strategic moves to capitalize on its virtualization/cloud computing expertise, which is expected to be accretive to growth over the next two-three years. Cloud computing leads to increased service and elevated security requirements for the companies that use it and CA's product portfolio is well positioned to benefit from it.

Although the company is growing through initiatives in the IT security and cloud computing segments, both of these come under the broad umbrella ofthe information technology (IT) management software market, where competition is stiff. While CA remains a leading player in its served markets, we recognize that these markets are not without challenges.

This apart, CA encounters aggressive competition in other areas of its business activity like financial and project management, anti-spy or antivirus software segment, etc. Some of CA’s largest competitors include International Business Machine (IBM), BMC Software (BMC), and Hewlett-Packard Company (HPQ) and Symantec Corp. (SYMC).

Although CA has posted decent third quarter results with improvement in revenue and profit, the product demand trend was moderate in the reported quarter. We believe that the company provided conservative fiscal 2012 guidance. In addition, its high debt balance, reduction in tech spending by government agencies and European exposure may pose some challenges going forward.

The company has a Zacks #4 Rank (implying a Sell rating in the short term).

 
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