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Korn/Ferry Plans Tracking Stock

Recruitment: Issue will involve its Futurestep.com online middle-management business. Firm also reports strong quarterly earnings.

March 10, 2000|From Bloomberg News

Korn/Ferry International said it will issue a tracking stock for its Internet-based middle-management recruitment business Future-step.com, as it posted fiscal third-quarter earnings nearly double year-earlier results.

Los Angeles-based Korn/Ferry, the world's largest executive recruitment firm, did not say when Futurestep's tracking stock would be issued. Futurestep's partners include the Wall Street Journal, which is owned by Dow Jones & Co., and online services America Online Inc. and Excite@Home Corp.

The company wants to issue Futurestep's tracking stock in the next four to five months.

"We have chosen a tracking stock structure because it allows us to unlock the value in Futurestep while preserving the many benefits of remaining part of Korn/Ferry including the strong name branding and established client relationships," said Elizabeth Murray, Korn/Ferry's chief financial officer.

In its earnings report, Korn/Ferry said net income rose to $8.3 million, or 22 cents a share, from $4.2 million, or 16 cents, a year earlier.

The company was expected to earn 21 cents, the average estimate of five analysts surveyed by First Call/Thomson Securities. Revenue rose 28% to $122.1 million.

"We delivered exceptional growth and are reporting our highest figures ever for revenues and earnings," President and Chief Executive Windle B. Priem said.

"Demand for executive search was strong and we were well-positioned to take advantage of that demand," he said.

Sales at Futurestep climbed to $9.6 million from $1.6 million, even as operating losses widened to $4.9 million from $3.4 million.

The company said the larger losses at Futurestep came from increased compensation and benefits expenses, start-up costs and continued advertising expenses.

Futurestep, launched in May 1998, had more than 549,000 job candidates in its database as of Jan. 31. It operates in Japan, Hong Kong, Singapore and Europe as well as the U.S.

Priem said in December that Futurestep does not expect to make a profit until the latter part of 2001.

Korn/Ferry shares fell 63 cents to close at $38.31 on the New York Stock Exchange.

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