Stuart Gentle Publisher at Onrec

Hiring dip takes toll on parent


TMP Worldwide, the parent company of online job site, on Tuesday said that its first-quarter earnings fell by more than a third, hurt by the slowdown in hiring.

The company, which has extensive offline recruitment holdings, also cut its earnings forecast and announced over 500 job cuts, citing continued weakness in its markets.

Most of the people in the industry are saying that the labor market has bottomed, but it's not getting better, Pacific Crest Securities analyst Steve Weinstein said.

TMP shares, which rose 43 cents at $23.31 in regular trading, before the results were released, fell a penny to $23.30 in after-hours trading, according to Instinet.

TMP said its earnings, excluding the effects of goodwill amortization and other items, fell to $15.6 million, or 14 cents per share, compared with $24.8 million, or 22 cents per share, a year earlier. Analyst expectations ranged from 13 cents to 16 cents per share with a mean of 14 cents per share, according to analyst tracking firm First Call.

The company's net income, including the effects of goodwill amortization in the year-ago quarter and merger and integration charges in both quarters, fell to $6.3 million, or 6 cents per share, from $10.2 million, or 9 cents a share, a year earlier. First-quarter commissions and fees fell to $290.8 million from $377.2 million a year earlier.

Although there are some promising signs of an economic recovery, the employment market has not improved, TMP President Jim Treacy said.

The company said it would cut 525 workers, consolidate about 80 offices, and take a $75 million restructuring charge in the second quarter. The cost savings are expected to save about $30 million in 2002.

TMP shares dropped Monday amid expectations the company would cut its forecast. On Tuesday, it lowered its earnings estimates even further than most analysts anticipated.

TMP expects second-quarter adjusted earnings of 14 cents per share on commissions and fees of $294 million, below First Call's estimate of 22 cents per share.

The company expects adjusted earnings of 90 cents per share in 2002 and $1.30 per share in 2003. Analysts polled by First Call on average expected earnings of $1.10 per share in 2002 and $1.49 per share in 2003.

The lowered guidance clears the air, Salomon Smith Barney analyst Lanny Baker said.

There's been a lot of anxiety, and it's not as if people worried for naught--the numbers did come down, he added.

Story Copyright 2002 Reuters Limited. All rights reserved.