CA Reports A Profit And A Loss For Fiscal 2001CA Reports A Profit And A Loss For Fiscal 2001

Computer Associates International says its revenue rose to $1.44 billion, up slightly from the pro forma $1.39 billion the enterprise management software maker posted in the same period last year. But as usual with CA's accounting, that's not the end of the story.

Recently, Computer Associates has received criticism for its "new business model," after several analysts expressed reservations about the way the company records its revenues. CA officials assert that it better recognizes product revenue over the life of a contract, rather than in one lump sum. Critics suspect CA shifted to its new accounting practice to conceal declining revenue and profit.

For example, CA reported earnings for the fourth quarter ended March 31 last year of $1.9 billion. If it stuck with last year's accounting method, it would've reported $733 million in earnings this year. CA CEO and president Sanjay Kumar, however, contends that, under CA's new business model, comparing last year's reported revenue with this year's under the new methods is meaningless. So that customers and investors can track CA's progress, company officials say, the company provides pro forma results--that is, results that treat previous quarters as if CA had always booked revenue over the life of the agreement, rather than in one lump sum.

The difference is significant. Using the new accounting standard, CA posted pro forma net income of $951 million for fiscal year 2001, compared with $787 million for fiscal year 2000. Using the old accounting standard, CA's results show a $591 million net loss for fiscal year 2001, compared with $696 million net income in fiscal 2000.