CA Technologies Outlines its Strategy

This is from the earnings call (transcript courtesy of Seeking Alpha):

Today, we are focused on 3 priorities to build long-term value for CA Technologies customers, employees and shareholders. First, to continue to execute our strategy and improve our operating performance. Second, to provide for a greater return of cash to shareholders through increased dividends and share repurchases. And third, to effectively use the balance sheet to return additional cash in the near term through an accelerated buyback.

In summary, we are targeting to return to shareholders approximately $2.5 billion through fiscal year 2014, or about 80% of our expected cumulative free cash flow over that period.

Key elements of the program include: One, an increase in the dividend from an annualized rate of $0.20 per share to $1 per share. That is a yield of approximately 4.5% based on yesterday’s closing market price and currently puts our dividend yield at the top of comparable technology companies. The board and management view returning cash to shareholders through dividends as an important component of our overall approach to enhancing shareholder value.

Two, a new $1.5 billion share repurchase authorization through fiscal 2014, including an accelerated repurchase of approximately $500 million under an agreement to be executed in the fourth quarter of fiscal 2012. Including the accelerated share repurchase and shares repurchased year-to-date, we expect we will have spent approximately $1 billion to buy back shares during fiscal year 2012. The $1.5 billion authorization replaces the approximately $230 million remaining under our current authorization. We are confident we have the balance sheet capacity to get this done and the program is expected to be funded by available U.S. cash.

Three, our strategic plan anticipates that we will continue our investment in the business consistent with that of previous years, or approximately $1 billion annually. This includes acquisition activity in the range of $300 million to $500 million per year, on average, through fiscal 2014 and the approximately $600 million we invest on average each year in organic research and development.

Posted by on January 25th, 2012 at 9:32 am


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