Cambridge Technology earnings stronger than expected
The computer service provider posts third-quarter earnings that surpass Wall Street expectations.
The company said net income for the quarter reached $10.7 million, or 18 cents per share, compared to $9.7 million, or 16 cents per share, for the same period in 1998. Analysts polled by First Call projected the company to earn 14 cents per share.
The company also reported revenue for the third quarter that reached $168 million, up 10 percent from one year ago. Cambridge Technology said demand for e-commerce services rose 41 percent in the third quarter, compared to the same period last year. Sequential revenue growth from the second quarter of 1999 increased by 3 percent, due mostly to increased global demand for the company's e-commerce services.
On the downside, Cambridge Technology said the revenue increase was partially offset by the impact of its customers spending money to complete Y2K work instead of contracting for new work installing packaged software applications and custom client-server applications.
Cambridge Technology, which provides management and consulting services to clients seeking to do business on the Internet, has made its reputation offering fixed-price contracts on tight deadlines.
Once a Wall Street darling, the Cambridge, Massachusetts-based company has struggled with a reorganization, executive turnover, plummeting stock worth, and revenue shortfalls.
Analysts believe the company is an acquisition target for a number of major European firms looking to gain significant footing in America.
In July, chief executive James Sims, who cofounded the company eight-and-a-half years ago, resigned to start a new business, and was succeeded by veteran executive Jack Messman.
"This company has enormous potential, but it has outgrown its infrastructure. Its reorganization, which is now nearly complete, has caused some internal disruption. The company has experienced higher turnover than its target of about 20 percent," Messman said in a statement.
Cambridge Technology said it expects lower fourth-quarter earnings because the reorganization brings higher employee compensation costs and reduced revenues.