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Cambridge Tech loss beats expectations

The professional services firm reports a narrower-than-expected first-quarter loss but says revenue growth slowed.

Cambridge Technology Partners today reported a narrower-than-expected first-quarter loss but said revenue growth slowed.

The professional services firm said its net loss for the quarter was $4.3 million, or 7 cents per share, compared with a net income of $7.5 million, or 12 cents per share, for the same period in 1999.

Analysts polled by First Call projected the company to post a loss of 20 cents.

As expected, first-quarter revenues were down to $147.6 million from $151.4 million in its year-ago period. Last quarter, the company said it expected to post a loss for the first half of 2000, based on flat revenues and the company's need to fund its growth in Internet services.

Like its rivals EDS, CSC and even the Big Five management consulting firms, Cambridge Tech has been revamping its strategy, aiming to capture more business e-commerce deals. All of the old-line consultancies, which traditionally have focused on large, complex back-office system installations, are now trying to score more lucrative projects with companies that are moving their businesses to the Web.

For the quarter, the company said its e-business consulting unit is growing more rapidly than expected. Quarterly revenues in its e-business unit were $49.5 million, an increase of 61 percent from $30.8 million in the same period a year earlier. Meanwhile, the firm's traditional services from custom client/server applications and installations of software, such as enterprise resource planning (ERP) applications, continued to decline, with revenues shrinking to $38.8 million in the first quarter from last year's $73.9 million.

For most of last year, Cambridge Tech, which was once a Wall Street darling, continued to struggle with executive turnover, a plummeting stock price, and revenue shortfalls. Most of the members of its original management team have ditched the old-line firm to join pure-play Internet consulting firms, several of which have enjoyed great success.

Even the firm's founder and ex-chief executive, Jim Sims, recently resurfaced with his own Internet consulting start-up, called Gen3 Partners, which focuses primarily on helping companies build online marketplaces or industry trading exchanges.

Earlier this month, Cambridge Tech filed a lawsuit against Sims, alleging he violated a noncompetition agreement. The firm claimed that Sims broke a severance agreement by starting a new company that directly competes with the professional services firm.