In its announcement last week, the company said it would post no more than 21 cents far below even the most pessimistic forecast. The 18 analysts covering Computer Associates were in even closer . None forecast higher than 60 cents or lower than 54 cents, and they averaged 55 cents, according to Zacks. The company said this week it would earn no more than 31 cents. And this is for the quarter that, being the closest in time, should be the easiest to predict.
Most analysts also forecast earnings for one and two years ahead.
A good number look three to five years forward as well. In hindsight, it always seems easy to spot the trend that led to the downside surprise. This time around, it appears that BMC and Computer Associates have fallen victim to a slowdown in the sale of new mainframe computers, which use their software. And it would stand to reason that, with the Federal Reserve trying so hard to slow the economy down by raising interest rates, the economy might actually be slowing down. In particular, companies that might have borrowed to buy new computer systems are now waiting until loans get less expensive.