Ciber Inc, the IT services firm, reported reduced first- quarter earnings, yesterday, below analysts’ expectations, and issued a warning of worse to come for its second quarter amid customer Y2K jitters.
Ciber posted net income, excluding merger costs, for the three months to September 30 of $10.3m, or 18 cents per diluted share, compared to $11.1m, or 23 cents a share, in the year-ago period. Analysts watching the firm polled by First Call had tipped it on average to earn 21 cents a share. Revenue was up 12.85% on the year ago at $187m, but fell 4.1% against the preceding June quarter. The firm said the quarter’s results reflected the industry-wide effect of reduced spending on IT services by client firms that are postponing new IT projects until after December.
Executives added that earnings had also been hit by costs racked up in readying the firm to snag business in a post-Y2K services world shorn of the millennium-compliance cash cow. The cost of providing consulting services spiraled 26% from the corresponding period to $119.4m, and selling, general and administrative expenses were up 15.5% to $43.075m.
The firm projected revenue further reduced to $180m for its second quarter, with cash earnings per share, excluding tax, merger costs and amortization, of 18 cents, compared to 22 cents for the first quarter. We expect the December 1999 quarter will reflect continued industry softness in addition to typical seasonal patterns, said Ciber’s chief financial officer, Rich Montoni.
Ciber said web consulting, spanning e-commerce advice and systems integration had expanded in the quarter to assume a 55% share of services revenue. Executives flagged up acquisitions as a continuing route to growth for the firm. Ciber announced the purchase of PeopleSoft higher education software developer, The Isadore Group Inc, on October 13 – the latest in a string of acquisitions, which contributed $1.535m to costs for the September quarter. The firm emerged as the second-most active acquirer in a survey of mergers and acquisitions activity among US IT services firms, published yesterday by investment bank, DeBallas & Co.
