Razorfish financial chief steps down
Despite strong fourth-quarter earnings, shares in digital services firm Razorfish drop after the company announces the resignation of its chief financial officer.
The company said CFO Larry Begley will leave the firm, citing family reasons in a prepared statement. Begley joined Razorfish when the company acquired I-Cube last February. Sue Black, executive vice president of mergers and acquisitions, integration and treasury, will assume the role until a replacement is found, according to the company.
Razorfish has hired an executive search firm to hire a replacement. Shares fell $6.50 or 12.5 percent to $45.38. The stock has traded as high as $56.93 and as low as $43.50 in the past 52 weeks.
News of the departure seemed to overshadow a solid earnings report for the New York-based company. Razorfish earned $5.76 million, or 6 cents a share for the quarter, one cent better than analysts' consensus estimates as polled by First Call.
Excluding revenue
from acquired companies, sales jumped more than 1,000 percent to $52.7 million from $4.7 million in the same period a year ago. Including acquisitions, revenue jumped 134 percent from $22.5 million a year ago.
Including merger and other related costs, Razorfish lost $23 million or 26 cents a share, compared to net income of $1 million or 2 cents a year ago.
Credit Suisse First Boston analyst Mark Wolfenberger raised his near-term price target for shares to $75. Lehman Brothers analyst Karl Keirstead reiterated his "buy" rating on the company with a 12-month target share price of $60.
Begley told financial analysts today that he had tired of the commute and wanted to spend more time with his family.
"While disappointed, we have no reason to believe that the CFO departure is a result of any fundamental company issue," Keirstead said in a report. Begley had been commuting from I-Cube's offices in Boston, where he lives, to Razorfish headquarters in New York.
About $33.7 million, or 64 percent of Razorfish's fourth quarter revenues came from its U.S. business, while the rest, or $19 million, came from business deals in Europe. About $4 million of the quarter's total revenues came from Lee Hunt Associates and TS Design, companies Razorfish recently acquired. During the quarter, Razorfish added new clients including JP Morgan and Startel Financial News Services and said it expanded business with existing customers NatWest, electronics company Sharp and the Helsinki Stock Exchange.
Keirstead said Razorfish's wireless business, a key part of the company's offerings along with strategic consulting and design services, could total 15 percent of revenues by year's end.