IT services company Mastech Corp said Thursday that it expects revenue and earnings per share for the third quarter to come in lower than expected. The Pittsburgh-based company attributed the shortfall primarily to the rapid winding down of business with an unnamed large systems integrator, as well as a general softness in the IT services market from a near-term customer focus on Y2K related issues.
Revenue for the quarter is now expected to be in the range of $116m to $120m and earnings per share in the range of $0.18 to $0.22, excluding a special charge of $0.05 to cover costs related to the shut down of past and current projects with the aforementioned integrator client. Analysts surveyed by First Call were expecting earnings of $0.26 per share for the quarter.
The company says a similar one-time charge is expected to be incurred in fourth quarter, by which time most projects with the integrator are expected to be completed. Mastech says that relationships with systems integrators have given it revenue stability over the years while it has diversified its revenue base. The winding down of business with this particular customer is part of the overall transition to offering a full suite of IT services to end-user customers, Mastech says. Over 85% of revenue is now derived from end-user customers compared, with 70% three years ago. á
