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Fourth-quarter revenue edged down 1.4% from the year-ago period to $83.3 million at Computer Task Group Inc. (NASD: CTGX), with information technology solutions revenue rising and IT staffing revenue declining. Fourth-quarter net income nearly doubled.
The Buffalo NY-based information technology solutions and staffing company said revenue from its more profitable IT solutions work rose 2.3% to $29.9 million, but IT staffing revenue decreased by 3.3% to $53.4 million.
"The further downturn in the economy began to affect our business in the fourth quarter with the largest impact coming from out lower margin staffing business as client and market demand for external IT resources declined," said Chairman and CEO James Boldt.
The company said a large customer cut its use of CTG staff by 425 starting in October, and the annualized impact is approximately $36 million.
CTG's fourth-quarter gross margin rose to 22.4% year-over-year from 22.2%.
Net income rose 90.1% to $2.3 million in the fourth quarter. It would have risen only 71% without the effects of foreign currency exchange.
Full-year 2008 revenue rose 8.6% to $353.2 million; and full-year net income jumped 84.6% to $7.8 million.
Gross margin for full-year 2008 was unchanged at 22.3%.
CTG estimates first-quarter 2009 revenue of $73 million to $75 million, down 13.5% to 15.8% year-over-year.
Full-year 2009 revenue is estimated at $285 million to $305 million, down 13.6% to 19.3%.
The company said it could benefit from the recently approved federal stimulus package's spending on electronic medical records.
"Healthcare currently contributes 26% to CTG's revenue, and we believe that this national [electronic medical record] initiative will provide additional power over several years to expand our healthcare focus and grow CTG's business, profitability and value," Boldt said.
Computer Task Group Inc. (NASD: CTGX)
For the fourth quarter ended Dec. 31, 2008, compared with the same period in the previous year.
Revenue: $83.3 million, -1.4%
Net income: $2.3 million, +90.1%
For the full year ended Dec. 31, 2008, compared with the previous year.
Revenue: $353.2 million, +8.6%
Net income: $7.8 million, +84.6%