Wednesday July 24, 12:45 pm Eastern Time
Dow Jones Business News
Ikon's 3rd-Quarter Net Jumped 65% on Cost-Cutting Efforts
VALLEY FORGE, Pa. --Ikon Office Solutions Inc.'s fiscal third-quarter net income soared 65% as cost-cutting efforts offset a decline in revenue.
Ikon, which provides businesses with imaging and document services and products, Wednesday reported net income of $43.1 million, or 28 cents a share, for the period ended June 30 , up from $26 million, or 18 cents a share, a year earlier. The latest results topped company expectations, as well as a Thomson First Call estimate of 23 cents a share.
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Assuming the company last year didn't amortize goodwill, an accounting practice which has been eliminated this year, year-earlier third quarter earnings would have been 25 cents a share.
Revenue slipped 7.1% to $1.22 billion from $1.31 billion amid the divestiture or downsizing of several unprofitable business lines throughout the fiscal year.
Last October, Ikon announced plans to exit from or downsize some of its businesses and accelerate other cost-cutting activities, which it said would result in 1,600 job cuts in 12 months. Ikon also said in October that it would eliminate an additional 1,000 employees through October 2002 , primarily through attrition.
Although the fourth quarter is typically a softer quarter for revenue, Ikon said it expects to earn 20 cents to 22 cents a share, compared with First Call's estimate of 20 cents a share. In the year-earlier fourth quarter, Ikon earned 12 cents a share, excluding items.
Moreover, Ikon again raised its fiscal 2002 guidance to between 94 cents and 96 cents a share from 87 cents to 92 cents a share, encouraged by improvements in its operational infrastructure and revenue mix. The new guidance represents about 16% improvement from a year earlier.
Analysts are looking for earnings of 89 cents a share for the fiscal year ending Sept. 30 .
Ikon expects that revenue will continue to be hurt by the de-emphasis of certain revenue streams and a cautious economic climate. As a result, the company anticipates revenue will decline by approximately 8% for the full year, and 4% to 6% for the fourth quarter.
Last fiscal year, Ikon had revenue of $5.27 billion, with $1.28 billion of revenue in the fourth quarter. Based on these numbers, the projected declines would put fiscal 2002 revenue at about $4.85 billion, and fourth-quarter revenue between $1.2 billion and $1.23 billion.
-Carrie Kocik; Dow Jones Newswires; 201-938-5388
(Rose K. Manzo of Dow Jones Newswires contributed to this