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CA Warning Points to Product Holes

After a turbulent few months, Computer Associates International Inc. (CA)s (NYSE: CA) first-quarter earnings will be as much as $55 million below original estimates. And one analyst says this could be part of a broader trend in the software industry that may lead CA to consider acquisitions.

The Islandia, N.Y.-based firm has confirmed that its first-quarter results will now be somewhere between $830 million and $850 million -- 3 to 5 percent below original guidance.

Investors took the news in stride. CA shares rose slightly in early trading this morning, up 3.75 percent to $25.46. Perhaps this was due to optimism about future bookings. In a statement, CA’s chief operating officer, Jeff Clarke, said the company's first-quarter direct bookings have grown 35 percent year-on-year and indirect bookings have grown around 40 percent.

Jasmine Noel, principal analyst at Ptak Noel & Associates believes a combination of factors is responsible for CA’s performance. “I am pretty sure that CA’s problems have affected them, but a lot of the software companies’ earnings are down,” she says.

Earlier this week, for example, BMC Software announced that its first-quarter earnings will be between $318 million and $328 million, below the estimated range of $345 to $355 million.

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