Keane profits improving after Y2K slump

Net income for the second quarter was $8 million, or 14 cents a share, an increase of 45 percent over last quarter's $5.5 million. Still, the company reported profits that were lower than those in its year-ago period. In the comparable quarter a year ago, the company reported net income of $26.6 million, or 39 cents a share.

Analysts polled by First Call/Thomson Financial expected Boston-based Keane to earn 14 cents a share.

Like other traditional consulting companies, Keane has suffered from a slowdown in large computer systems integration projects. That slowdown is partly because of a decline in Year 2000-related business as well as an overall shift in the services industry to target clients that need help moving their business to the Web.

Last quarter, the company formed a new business unit called Keane Interactive, which provides clients with Web design, strategy, development and interactive advertising in an effort to capture more lucrative Internet jobs. Keane competes in a growing pool of services and consulting companies, including Electronic Data Systems, IBM Global Services, Computer Sciences and others. EDS is slated to report second-quarter earnings tomorrow.

Revenues for the second quarter came in at $221.8 million, down from $280.5 million in the same quarter last year. Revenues were slightly higher from last quarter's $216.2 million.

The company said its sequential profit growth was driven by sales in its consulting practice, e-business unit and application outsourcing practices.

"This quarter's sequential revenue growth is significant because it marks the end of six quarters of declining revenues caused by the runoff of our substantial Y2K revenue stream," Keane chief executive Brian Keane said in a statement.

The CEO recently assumed the role of president after former president John Keane Jr. announced his resignation to pursue interests in the wireless sector. John Keane Jr. continues to serve on the company's board.