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Korn/Ferry revenue falls, CFO stepping down

March 11 2009

Executive search firm Korn/Ferry International Inc. (NYSE: KFY) reported revenue fell 31.9% to $144.5 million in its fiscal third quarter ended Jan. 31. The company said demand for its services fell in November and December, but has been consistent for the past two months. In addition, CFO Stephen Giusto said in a conference call with analysts that he would step down before the end of the fiscal year citing family medical reasons. He would remain with Korn/Ferry as a senior strategic adviser to the CEO.

Korn/Ferry posted a third-quarter net loss of $22.4 million, but said it would have reported net income if it excluded a $16.8 million restructuring charge and a $15.3 million non-cash asset impairment charge.

The $16.8 million restructuring charge includes $13.5 million in severance costs from a workforce reduction.

Korn/Ferry reported it plans a further workforce reduction in its fiscal fourth quarter and consolidation of offices with $13 million in separation costs predicted, according to the conference call with analysts.

The company also reported in the conference call that it has seen increased interest in its recruitment process outsourcing offerings, particularly from governments. However, fee revenue fell 30% year-over-year at its Futurestep division, which provides RPO and other services. Futurestep posted a $2.5 million operating loss in the third quarter, and the company expects the division won't be profitable in the fiscal fourth quarter.

Korn/Ferry International Inc. (NYSE: KFY)
For the fiscal third quarter ended Jan. 31, 2009, compared with the same period in the previous fiscal year.
Revenue: $144.5 million, 31.9%
Net loss: $22.4 million vs. net income of $16.3 million

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