Shortfall in Cambridge Shakes the Computer Consultant Sector

Sapient, Whittman-Hart and Complete Business Solutions slide.

Author:: David Shabelman
Publish date:: Mar 19, 1999 11:25 AM EST

SAN FRANCISCO -- An earnings shortfall at Cambridge Technology (CATP) pounded shares in the Cambridge, Mass., computer consultant and others in its sector.

After the close Thursday, Cambridge warned that first-quarter earnings would come in between 12 and 14 cents a share, short of the 24-cent estimate from

First Call

, as a result of slower-than-expected sales growth. Then, in a research report this morning,

Credit Suisse First Boston

wrote that the miss was not surprising, but its magnitude was "concerning." Cambridge Technology was off 9 5/16, or 44%, at 11 11/16.

Though CS First Boston said the problems are specific to Cambridge and don't hurt others in the industry, the stock movement in the sector suggests investors believe otherwise.

Sapient

(SAPE)

was off 4 1/2, or 7%, at 61 1/2, while

Whittman-Hart

(WHIT)

was down 4 1/8, or 16%, at 22 and

Complete Business Solutions

(CBSI)

was off 3 3/4, or 17%, at 19.

Wayne Segal, an analyst with CS First Boston, attributed Sapient's slide to its links to Cambridge: The company competes with Cambridge and its founders once worked there. Segal said Cambridge and Sapient are similar businesses but with different focuses, and he strongly recommends buying on the dip in Sapient.

"This business is all about execution, and Sapient is one of the best execution companies in the industry," Segal said.

Segal said that though billing in January, February and the first week of March for the consultancy sector was in line with or ahead of expectations, there is some trepidation over the last three weeks of March, which is the biggest billing month of the quarter.

"On a fundamental basis, I would be owning all those names," the analyst said. "On a technical basis, the stocks look like they could see more downside."

CS First Boston has Sapient and Whittman as core holdings and has done underwriting for both firms.

Meanwhile,

Adobe

(ADBE) - Get Report

benefited from strong first-quarter earnings and a bullish second-quarter forecast. The company's earnings, at 60 cents a share, beat by 8 cents the 52-cent estimate from First Call. The company also forecast second-quarter earnings of 62 cents to 66 cents a share, far above the 56-cent First Call forecast. Adobe Systems was up 4 1/2, or 9%, at 54 1/4.