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ComputerWire: IT Industry Intelligence

Computer Associates International Inc lowered its revenue guidance and admitted government scrutiny was affecting its share price, when it unveiled its first-quarter results yesterday.

The Islandia, New York-based software company reported sales up 7.4% to $765m for the quarter ending June 30. Its net loss was $65m, compared to a $342m loss a year ago. Once capitalized software costs and goodwill and other intangibles were excluded, the company made a net operating income of $12m, compared to a $141m loss last year.

The company said it expected revenue for the full year to be in the range of $3.1bn to $3.2bn, slightly lower than the $3.2bn to $3.26bn it originally anticipated. CA said it appeared that economic recovery would take longer than originally anticipated.

It said it still expected operating earnings per share to be in the $0.10 to $0.13 range. For the second quarter, it expects revenue to come in between $760m to $775m, with operating earnings per share of $0.01 to $0.02.

CA's president and CEO Sanjay Kumar said that the firm's European business had held up, but North America had been more volatile.

Referring to investigations into the company's accounting practices by the SEC and US Attorney's Office, some of which focus on performance-linked bonuses paid to senior executives in the mid-1990s, Kumar said he was confident CA's accounting would be found to be "proper". At the same time, he admitted that the investigations were weighing on the company's share price.

CA also addressed recent speculation regarding the company's debt. In a statement accompanying the results yesterday, Kumar said the company was "pleased with out ability to generate strong cash flows and reduce our debt obligations prior to their scheduled maturity."

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