Sapient Meets Lowered Q4 Expectations
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Systems integrator and Web designer Sapient reported earnings in line with analysts' lowered expectations Thursday, citing slowdowns in spending by traditional advertisers.
The Cambridge, Mass.-based company posted fourth-quarter pro forma net earnings of $13.3 million, or $0.10 per diluted share, on revenues of $139.2 million. That figure is down slightly from the $9.5 million, or $0.07 per share, reported by Sapient in the year-ago period, but meets analysts expectations of $0.10 per-share earnings, according to Thompson Financial/First Call.
Quarterly revenues were still well above the $81.8 million reported in fourth quarter 1999, while slipping from $138 million in revenues in third quarter of 2000. In third quarter, Sapient reported $11.9 million in earnings, or $0.09 per share.
For the year, Sapient posted revenues of $503.3 million, up 82 percent from last year. Earnings before charges totaled $57.7 million, or $0.43 per share, compared to $36.0 million, or $0.29 per diluted share, for 1999.
While in line with the Street's expectations, the company had to cut its guidance for the quarter earlier this month, thanks to traditional clients' continued reluctance to make Web marketing and technology investments. Previously, it had expected $143 million in revenue and earnings of $0.12.
But while pointing to market conditions, Sapient said its ability to stand out among competition helped it turn in what it maintained was a successful showing in 2000.
"As companies transition from looking at the Internet as a point solution to considering the competitive advantages that new technologies make possible throughout their enterprise, companies are turning to us," said Sapient co-chairman and co-chief executive officer Jerry Greenberg. "Over the last decade we've worked hard to remain the leader in providing clients with the complement of insights and capabilities needed to compete successfully."
Sapient also attributed its profitable year to global expansion in Germany, India and Japan, with annual international revenues more than doubling to 9 percent of revenues in 2000.
"Overall, we are satisfied with our financial results for the quarter, given the challenging environment," said Sapient chief financial officer Edward Goldfinger. "For the year, revenue and earnings growth were strong, and we generated approximately $100 million in cash flow from operations."
It hasn't been a good year for everyone in Sapient's field. Competitor marchFIRST announced additional layoffs this week -- its third major restructuring in recent months -- and onetime Alley darling Razorfish said in December that it wouldn't see a fourth-quarter profit.