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Keane to sell its help-desk unit

Aiming for profitability across the board this year, the professional services provider agrees to sell its help-desk business and announces the completion of a restructuring plan.

    In an effort to achieve profitability across the board this year, professional services provider Keane on Monday said it has agreed to sell its help-desk business and also announced the completion of a restructuring plan.

    The sale, which is subject to customary closing conditions, includes assets associated with Keane's technical support centers in Tucson, Ariz. and Kirkland, Wash., which employ approximately 1,000 people in total. A representative said the current workers are expected to remain employed there under the deal.

    The Boston-based company, which did not disclose the name of the buyer, said it is selling the unit to a global company focused in technical support services.

    The closing of the divestiture is slated for this month. Keane did not disclose the terms, but said it expects to realize a one-time gain associated with the sale in its first quarter.

    Keane, which helps clients with computer systems integration and business consulting, also said it completed the restructuring of certain underperforming business units and expects to incur a related one-time charge in its fourth quarter in the range of $13 million to $15 million. The company's help-desk division along with the other underperforming business units it closed represented approximately $52 million in revenue last year.

    The expected charge for the fourth quarter, which ended Dec. 31, is primarily related to the consolidation and closing of offices, employee severance costs, facility leases and for other miscellaneous purposes, the company said.

    The news comes amid an overall slowdown in the market for consulting services--primarily Internet-related services targeting dot-com clientele. A range of players, from smaller Internet consultants to more-traditional professional services firms, have been hit by the downturn, which prompted many of them to scale back operational expenses via layoffs or other restructuring initiatives.

    Keane, an old-line provider of professional services, competes with companies including Computer Sciences, IBM Global Services and Perot Systems. Though conditions in the consulting field soured first for newer Internet consultancies, old-line giants were not altogether shielded from the downturn.

    Last month, Dallas-based Perot eliminated 200 jobs as part of its efforts to streamline its business. Cambridge Technology Partners, also considered an old-line services company, recently laid off 280 employees and warned of lower fourth-quarter expectations related to the slowdown in the Internet-related consulting market.

    With the sale of its help-desk operations, Keane said its remaining business units are positioned to be profitable in 2001.

    The company also issued guidance for its fourth quarter, first quarter and fiscal year 2001. The company expects to report higher fourth-quarter revenue in the range of $218 million to $219 million with earnings per share at 13 cents, matching analysts' estimates. For its first quarter, Keane estimates revenue in the range of $208 million and $212 million with earnings per share between 14 cents and 15 cents.

    After the sale and the closing of underperforming units, Keane said it expects revenue for its fiscal year to be in the range of $880 million to $920 million.

    The company is slated to report earnings for its fourth quarter on Feb. 14.