Fair Isaac to Restructure, Cut Staff
SAN FRANCISCO - In an apparent response to a difficult second quarter that ended Monday, Fair Isaac (FIC) announced layoffs and a corporate restructuring Tuesday.
The Minneapolis, Minn. developer of FICO credit-scoring software said it would take a pretax charge of $7 million for the quarter. Fair Isaac was expected to post revenue of $204.6 million, net income of $22.4 million, and EPS before items of 43 cents, according to Thomson Financial.
The restructuring includes the sale of several unprofitable business units, including Fair Isaac's insurance-bill review business to
Mitchell International
for an undisclosed amount. The company is also selling Cortronics neural research and several services, such as advertising, which will reduce staff by about 220 employees.
The company had 2,824 employees at the end of its last fiscal year in September 2007.
The discontinuation or sale of these businesses will reduce revenue and related costs by $65 million a year, "having a negligible impact on net income," the company said in a statement.
But the company also plans to eliminate another 200 "lower-priority" jobs, for an annual pretax savings of $29 million. The layoffs will add $6 million in severance costs, the bulk of the charge against earnings, according to the company.
Fair Isaac has extended its existing freeze on hiring and plans to close or consolidate a dozen facilities, saving another $6 million.
Taken together, the restructuring will reduce costs by about $100 million, according to the company.
Fair Isaac's revenue is coming under increasing pressure after credit scoring agencies launched a system to compete with its FICO system.
Shares were down 5 cents, or 0.2%, to $22.46 in after-hours trading. The company is due to report second-quarter earnings April 28.