"It looks like the whole sector is coming under a cloud of uncertainty...."
I'd have to agree--except that the sector has been under a clould since CA warned that the high-end mainframe software faced a slowdown. (For which the management was reviled, remember?)
I found it interesting that although mainframe revenues were down 8%, they were higher than I expected and than most of the Street expected. And note that the company made the numbers with no broad sales contest and without the help from large deals that used to buoy results. And we haven't yet seen the impact of IBM's mainframe product cycle, which usually takes around nine months to translate into software sales for CA.
Compuware is definitely having a negative effect on CA and on BMC. I suspect that there is more going there of a company-specific nature than meets the eye.
And, of course, what's hitting everybody who has been growing by acquisition is the SEC's focus on writing off in-process R&D. (NETA is acting like death, understandably, and is probably a buy right now.) CA says that there is no problem, but, undoubtedly, it's a drag on the multiple while this issue is pending.
I agree that it may be a bit choppy over the near term, but I'd be accumulating, i.e., buying on weakness with a 12-month horizon. |
