Xceed's Acquisitions, Dot-com Receivables Hit Bottom Line
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Interactive agency Xceed Inc., said more restructuring charges were in the offing after it reported a net loss of $139.2 million, or $5.82 per share, for its fiscal fourth quarter which ended August 31.
The results represent a 3,662 percent increase over the year-ago loss of $3.7 million, or $0.21 per share.
Xceed's fourth quarter revenues rose to $33.7 million, an increase of 69 percent over the $19.9 million it took in during the same time in 1999. Interactive and strategic consulting revenues were $14.4 million, up by 157 percent compared to last year. For the year, revenues were $108 million compared to $63.5 million for 1999.
For its twelve months accounting period ending ending August 31, Xceed reported a net loss to common shareholders of approximately $173.8 million, or $8.30 per share. For 1999, the The fiscal year-end loss from continuing operations includes write-offs on accounts receivable which totaled $9.3 million. Xceed CEO Howard Tullman said dot-com companies that had since gone out of business contributed to that charge.
The company also said it would take additional charges as a result of a strategic restructuring that, while announced earlier in the year, has accelerated in recent weeks.
Restructuring was underway in the company's Atlanta office, which resulted in the cuts of 15 full-time employees there, bringing the total headcount across the company to about 470. Company officials said they would focus more sharply on Internet services now that it had shed non-Internet businesses. "We have completed the sales of our legacy business units and most of the rebuilding of our management team," said Scott Mednick, chairman of Xceed. "At the same time we continue to focus on reducing costs and realigning our workforce to meet the needs of our clients."
Added Tullman, "We strongly believe that our organizational restructuring is a critical piece of the foundation for our growth and a necessary investment to ensure Xceed's future success. "Tullman told atNewYork that the company is pursuing additional long-term engagements on projects and being more selective about the short-term engagements that can add to customer acquisition costs.
Some highlights from the year:
- Cost of revenues for the fiscal year were $97.1 million and represented 89 percent of Xceed's total revenues, up from 83 percent of total revenues during the prior fiscal year. "The increase was from additional staffing requirements in the interactive service business in order to service the increased revenues and underutilization of billable staff," the company said. In addition, personnel costs from other acquisitions drove the percentage increase.
- Accounting for goodwill from the company's acquisitions also wiped $87.1 million from the books. "Due to the recent economic developments in the marketplace, some of our acquired businesses have not been able to meet their initial expectations," compared to the prices that were paid before the market correction hit the markets, company officials noted.
Shares of Xceed were off 25 percent to $0.93 in Friday's early going.