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Korn/Ferry Loss Narrows on Cost Cuts

February 25, 2003|From Bloomberg News

Korn/Ferry International, one of the world's largest executive-search firms, narrowed its fiscal third-quarter loss and expects the loss in the current quarter to shrink as well after the Los Angeles company cut costs.

The net loss narrowed to $2.56 million, or 7 cents a share, from $7.25 million, or 19 cents, a year earlier. Revenue in the period ended Jan. 31 fell 13% to $80.7 million from $92.8 million, the company said in a statement.

Korn/Ferry was expected to have a loss of 9 cents, the average estimate of six analysts surveyed by Thomson First Call.

A weakened economy and a possible war with Iraq caused clients to reassess their hiring needs, Chief Executive Paul Reilly said during a conference call with investors and analysts.

The loss for the fourth quarter ending April 30 is expected to narrow to about 3 to 9 cents a share. The net loss a year earlier was 35 cents a share.

Excluding asset impairment and restructuring costs, the loss was 12 cents a share. The company said it hasn't determined if it will have any such costs.

In the third quarter, Korn/Ferry cut compensation and benefits expenses by 14% to $54.5 million by paring its consultants and administrative staff to 1,550 from 2,000 a year ago. The company in December forecast a loss of 4 cents to 10 cents a share.

Recruitment sales for executives who earn at least $150,000 a year slid 12% to $72.4 million from $82.7 million, as clients cut back on hiring primarily in North America and Europe, Korn/Ferry said.

Revenue at Futurestep, Korn/Ferry's project and middle management recruitment unit, fell 18% to $8.3 million.

For the fourth quarter, the average estimate of five analysts surveyed by First Call is for a loss of 3 cents a share.

Shares of Korn/Ferry fell 15 cents to close at $5.95 on the New York Stock Exchange.

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