Keane Tumbles on Cutbacks

Richard Garnick was dismissed for misuse of travel funds and 'unauthorized communications.'
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Updated from Sept. 29

Keane

(KEA)

dropped 10% Monday after the information technology outfit lowered third-quarter estimates and said another high-level executive has departed amid allegations of misconduct.

For the third quarter, the company now projects earnings of 11 cents to 13 cents a share, down from its guidance of 13 cents to 15 cents.

On a so-called cash basis, which excludes various items, Keane estimates earnings of 16 cents to 18 cents a share, compared with an earlier projection of 18 cents to 20 cents.

Analysts polled by Thomson First Call had forecast cash earnings of 19 cents a share.

"We continue to realize cost savings from Keane's ongoing transformation, however, top line growth is taking longer than we had anticipated," said John Leahy, interim president and CEO, and executive vice president and chief financial officer of Keane, in a statement late Friday.

The company expects to report revenue of $230 million to $232 million, below its earlier forecast of $240 million to $250 million. Analysts, on average, project revenue of $245.6 million.

Separately, Keane said that Richard Garnick, president of North American services and global business lines, has been dismissed for reasons related to compliance with the company's policy on travel expenses. The firing also related to "unauthorized communications inconsistent with the company's interests," Keane said.

The company said it won't discuss specific details of the dismissal.

Garnick is the second Keane executive of late to leave under allegations of wrongdoing. In May, CEO Brian Keane resigned after the company learned of employee allegations related to his personal conduct. He has denied any unlawful behavior.

Shares fell $1.41 Monday to $13.