Cambridge Technology Partners Inc delivered on its earlier promise of poor first-quarter results, reporting net income down 40.2% at $7.5m, or $0.12 per share. The bottom line matched expectations that had been revised from an earlier prediction of $0.24 in earnings. Revenue for the Cambridge, Massachusetts-based IT consulting and services company rose only 6.4% from the year- ago quarter – a huge disappointment for a company that had become a sector bellwether with quarterly revenue growth that regularly topped 50%.
The company warned in March of the decline in fortunes and explained that the benefits of its restructuring activities, which were completed in February, failed to materialize as quickly as expected. Decreased demand for ERP services also hit the quarter hard. CTP now says that, due to a shift in demand from ERP to interactive and web-based services, it will be retraining and relocating a large number of employees into its e- business segments. Adding to the bad news, that initiative will result in a second-quarter charge of between $7m and $9m, the company said.
The company is now being considered by some as a prime takeover target, given its recently-depressed market valuation CTP’s share price took a dive after the warning, as the 1999 revenue goal was lowered to a range of $660m to $675m, down from earlier expectations of between $785m and $795m. The shares, now trading at $14, were above $30 just two months ago and had traded as high as $58.375 in the past 12 months. Larger services outfits like Computer Sciences Corp or EDS Corp have been mentioned as possible suitors, as has Computer Associates International Inc.
