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October 14, 1998

CAMBRIDGE MEETS ESTMATES AS GROWTH SLOWS

By CBR Staff Writer

IT consultancy Cambridge Technology Partners reported third- quarter results in line with expectations despite declining revenue growth in the North American market. The company posted net income down 7.4% at $9.7m on revenue up 30.8% at $153.1m. Results for the quarter include an $8.4m charge stemming from the acquisition of Excell Data Corp. Net of the charge, earnings per share would have been $0.25, matching the consensus estimate of analysts surveyed by First Call. Nine-month net income rose 27.7% to $35.7m on revenue up 46% at $451.9m. Earnings per share fell 5.9% to $0.16 for the quarter and rose 23.9% to $0.57 for the nine months. The company said results were mixed across it businesses during the quarter, with the enterprise resource planning and management consulting businesses showing growth of over 40% year-over-year and international revenues growing 51% during the quarter to $48.1m. However, there was a downturn in the North American rapid application deployment business. As a result, North American net revenues grew at 23% during the quarter to $105.0m – about half of their historical growth rate. The slower growth in the RAD business is being blamed on a number of clients opting to defer or cancel strategic IT initiatives in favor of completing Year 2000 remediation activities, increased competition and a decline in new business win rates and project transition rates as clients entered annual budgeting cycles. The company has previously warned that Y2K and budgeting issues would slow its top line growth going forward. Cambridge added more than 800 employees during the quarter, including Excell. It closed the quarter with 4,300 employees in 53 offices worldwide.

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