Sapient keeps impressing Street

Sapient continues to wow Wall Street, announcing 95 percent revenue growth and a 68-percent jump in net income for the fourth quarter.

Kim Girard
Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.
Kim Girard
2 min read
Sapient continued to wow Wall Street this week, announcing 95 percent revenue growth and a 68 percent jump in net income for the fourth quarter.

The Cambridge, Massachusetts-based IT consulting firm posted fourth quarter revenues of $52.5 million, up from $26.9 million a year ago.

Net income for the quarter, excluding a charge for the acquisition of Exor Technologies, was $6 million, up 68 percent from a year ago. Earnings per share rose 54 percent to 21 cents from 14 cents a year ago, beating Wall Street estimates by a penny, according to First Call.

For the year, Sapient reported net income, excluding charges, of $20.7 million, or 74 cents per share. That compares to net income last year of $12.7 million or 49 cents a share, excluding a one-time $560,000 charge.

Revenues in 1998 increased 77 percent to $160.3 million from $90.36 million for 1997. The company absorbed a one-time $11.1 million charge for the acquisition of Web design company Studio Archetype. That charge was partly offset by a tax benefit of $4 million, the company said.

Sapient competes with privately held rivals Scient and Viant, as well as publicly held Cambridge Technology Partners, and USWeb/CKS. These companies have been busy selling themselves as one-stop shops capable of building Web sites and e-commerce applications and connecting them to sophisticated back-end database and transaction systems.

According to Cambridge, Massachusetts-based market research firm Forrester Research, the e-commerce and Internet/intranet services market is estimated to rocket to nearly $33 billion by 2002, with an annual growth rate of 60 percent predicted.

Analysts expect Sapient's growth to reflect that market boom. In a research note posted this morning, Morgan Stanley analyst Michael Sherrick raised his 12-month price target for the company's shares to $85 from $56, noting that the company's revenue from Web-based services should grow from 45 percent in the fourth quarter of 1998 to 70 percent by next year.

Sapient topped Morgan Stanley's fourth-quarter revenue estimate of $48.6 million, checking in with $52.5 million.

A culture that embraces flexibility has proven key to Sapient's success, enabling the company to nimbly shift from client-server to Internet-based services, Sherrick said.

"Their flexibility has enabled them to see a trend and embrace it," he said.

The company credits its revenue growth to soaring demand for Internet business and e-commerce consulting services, as well as its ability to handle large, complex integration and consulting projects.

Last year, Sapient created and launched two new high-profile Internet banking services, HomeLink and OfficeLink, for BankBoston, among other projects. Newly acquired design firm Studio Archtype redesigned the Web site for online investing service E*Trade, a project that included branding, adding content, and providing new user tools.