Analysts continued to raise concerns about a jobs recovery Thursday as Wachovia cut earnings estimates for
( TMPW), saying the staffing firm's exposure to the information technology space could hamper its progress.
Wachovia lowered its earnings estimate for TMP Worldwide, the parent company of Monster.com, to $1.08 a share from $1.20 a share for 2002; it cut forecasts for 2003 to $1.65 a share from $1.80 a share. Also Thursday, weekly jobless claims data, which can be erratic, came in worse than expected.
"Revenue has been flattish in February and March at recruitment firms," said Mark Marcon, the analyst at Wachovia Securities. "There is still a reluctance among companies to begin hiring, but I think they'll become more comfortable after year-over-year comparisons on profitability show improvement."
Marcon said he is optimistic TMP will soon see improvement, maintaining a strong buy on it. "The lag between employment data and the GDP cycle is not as much as what people think," he said. "Historically, there's been a 33% jump in newspaper advertising in the first 12 months of an expansion."
But TMP's higher exposure to IT recruiting than other firms' has Marcon a little concerned. "From that perspective, they may lag," he said. "But they've been diversifying away from IT for a while."
In the fourth quarter, the number of lines for help-wanted ads in newspapers fell to levels not seen since 1964, and overall spending for staffing dropped to $6.4 billion in 2001 from $9.3 billion in 2000. But on hopes of an economic recovery, outsourcing firms have been rallying since lows last fall.
Shares of TMP are up 20% since October, but the stock has taken a steep drop lately after it lost a bid to buy Hotjobs.com to
and its accounting practices were scrutinized in a
magazine article. In recent trading, TMP was ahead 17 cents, or 0.5%, at $33.24.
In February, TMP, which operates traditional recruitment businesses in addition to its Monster.com Web site, said earnings would come below expectations at between $1.35 a share and $1.40. TMP also said it planned to cuts costs at its underperforming newspaper and European businesses in the first quarter.
TMP is not the only company to have warned lately. On Wednesday,
warned for the third time in three quarters that it would miss estimates. And in March, placement firms
said upcoming results would come in below expectations.