Updated from 11:50 a.m. ESTShares of TMP Worldwide ( TMPW) rebounded from their session lows Wednesday after executives pledged to take the ax to operations that aren't living up to expectations. The shares were recently trading at $28.59, down $3.32, or 10.4%, after earlier falling as low as $26.83. TMP sells advertising and direct marketing services and owns job-hunting Web site Monster.com. On a conference call, company executives said weakness in its newspaper advertising business and its European operations, particularly France and Germany, over the past few months led TMP to cut estimates. The executives said they planned to cut costs sharply in both the newspaper and European businesses during the first quarter. Despite the lowered estimates, executives voiced confidence that business would pick up when the economy picks up. While Europe is performing poorly, the company said it is confident that the job market is turning in the U.S., which accounts for 62% of their sales.
GuidanceTMP said Tuesday it expects first-quarter earnings between 13 cents to 16 cents a share and 2002 earnings of $1.35 to $1.40. Analysts had been expecting 23 cents for the first quarter and $1.46 for the full year, according to market researcher Thomson Financial/First Call. Those estimates have since fallen as a number of brokerages lowered their ratings on the company. On Wednesday morning, analysts at several brokerages lowered their full year earnings estimates and 12-month price targets for the company. Robertson Stephens lowered its earnings per share estimates for 2002 to $1.25 from $1.45 and dropped its 12-month price target to $36 from $40. UBS Warburg was more aggressive, lowering its full year earnings estimates to $1 from $1.50 and slashing its 12-month price target to $50 from $70. TMP's lowered first-quarter and year guidance follows a fourth quarter in which the company met estimates by earning 24 cents a share before items. Including items, TMP earned 16 cents a share, up from 8 cents in the prior-year period. Total commissions and fees for the quarter fell 13.8% to $326.1 million from $378.2 million a year ago.
|Scary Monster |
TMP Share Price Stalls Out
Meanwhile, due to changes in goodwill accounting rules, continued cost-cutting, and expectations that its European business and its Monstermoving business will move into the black this year, the company said margins could rise to the high teens from the low teens.