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Global Credit Research |
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Rating Action |
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1 JUN 2006 |
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MOODY'S REVISES CA, INC.'S OUTLOOK TO NEGATIVE FROM POSITIVE |
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Approximately $1.8 Billion Debt Affected
New York, June 01, 2006 --
Moody's Investors Service has affirmed the Ba1 senior unsecured rating
for CA, Inc. and has revised its rating outlook to negative from
positive. The outlook revision to negative is prompted by the company's
May 30th announcement that it will delay the release of its fourth
quarter and fiscal year ended March 31, 2006 earnings report and has yet
to conclude its review of forecasting, processing, and monitoring of
sales commissions. The revision reflects challenges the company has to
implement effective financial controls, the recent departure of key
personnel, including the company's chief software architect, financial
officer, and operating officer, as well as subdued billings performance,
which the company announced on May 30 declined slightly in fiscal 2006,
excluding acquisition related products and accelerated customer
payments.
The company's Ba1 senior
unsecured rating reflects its portfolio of mission critical software
product offerings and large installed base of a diverse set of
creditworthy clients. However, the rating also reflects the company's
unsettled fulfillment of the terms of the Deferred Prosecution Agreement
(DPA), subdued organic client billings growth, competition from
integrated and non-integrated technology vendors, and exposure to mature
mainframe and Unix markets.
CA's SGL-1 liquidity rating
reflects the company's sizable free cash flow (defined as cash flow from
operating activities less capital expenditures and dividends) and ample
internal and external sources of liquidity. Liquidity sources include
cash and marketable securities balances of $1.8 billion at December 31,
2005 and a $1 billion unused revolving credit facility.
Headquartered in Islandia,
New York, CA, Inc. is an enterprise software vendor for enterprise
management, security, and storage applications.
New York
John Moore
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Brian Oak
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
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