Major Technology player CA Inc. (CA) recently disclosed its strategic tie-up with Fujitsu Limited, whereby the two companies will enhance their product portfolio  as well as their cloud computing strategies.
 
As per the terms of the latest Original Equipment Manufacturer (OEM) agreement, Fujitsu will sell CA Application Performance Management solutions in Japan, along with its SOA middleware suites and system management software suites. Moreover, CA will sell Fujitsu’s business process performance Analytics suite.
 
This joint collaboration will offer products, which are expected to enhance the ability of both the companies to improve management of heterogeneous enterprise IT environments and enhance the supply chain management procedure of different companies. The new cloud solution will help organizations gain confidence across the business process outsourcing and IT application infrastructure arena.
 
This collaboration will further enhance the prospects of CA in the cloud computing space. The company is slowly expanding its opportunity in the virtualization/cloud computing space and is expected to accelerate growth over the next 2–3 years. Particularly, the second half of 2010 is likely to be the turning point, establishing CA as a beneficiary of virtualization/cloud computing.
 
CA’s recent acquisition of the cloud computing company Oblicore Inc. brought the technical know-how of the latter in the cloud computing segment. The focus on cloud computing is encouraging, as the increasing adoption of cloud-based technologies promises strong growth rates. However, prudent management of the business will be imperative.
 
Moreover, the stiff competition that CA faces should also be kept in mind. There are many big and established players in the space, which will no doubt temper growth prospects of CA to some extent.
 
The company has delivered consistent results over a long period. During the first quarter of 2011, CA performed well in most of its business segments and across its geographical regions. This apart, the company also delivered significant growth in top line and bottom line. We believe that with a recovery in macroeconomic conditions, the company should be able to deliver decent numbers in the upcoming quarters, although rationalization in IT spending may have a dampening effect.
 
We currently have a short-term Hold rating, or Zacks #3 Rank on CA shares.
 
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