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Korn/Ferry International swings to third-quarter profit

by Katharine Lau
March 09, 2010

Korn/Ferry International Inc., an executive recruitment firm, swung to a profit in the third quarter in the face of a still laboring U.S. economy.

The Los Angeles-based staffing company posted earnings of $7.9 million, or 17 cents per diluted share, in the quarter ended Jan. 31, compared with a loss of $22.4 million, or 52 cents per diluted share, in the year-earlier quarter. Korn/Ferry handily beat analysts’ quarterly estimates of 11 cents, as compiled by Zacks Investment Research Inc.

Sales totaled $152.9 million, up 5.8 percent from $144.5 million in the year-earlier quarter.

Korn/Ferry CEO Gary Burnison summed up his thoughts on the third quarter results and financial guidance for 2010 in a teleconference Tuesday: “Our orientation going back 24 months was to preserve the brand, position the company for growth and accelerate through the economic term and really seize opportunity in the volatility that has been around. And that is still our orientation, that despite the economic climate, we are looking forward.”  

Macquarie Group Ltd. analyst Kevin McVeigh gave Korn/Ferry a "neutral" rating as of Feb. 26.  

“A year ago, credit was so tight, there was so much uncertainty and here we are with a tremendous bounce off the bottom,” said Macquarie Group Ltd. analyst McVeigh said during the teleconference.  

Analysts estimate diluted earnings per share to be 27 cents for the fiscal year ending April 2010, as compiled by Bloomberg LP. 

For the nine months ended Jan. 31, Korn/Ferry posted a loss of $3.6 million, or 8 cents per diluted share, compared with a profit of $7.1 million, or 16 cents per diluted share, earned in the year-earlier period. Sales declined 24.7 percent to $422.7 million from $561.7 million.

Korn/Ferry’s shares closed Tuesday at $18.24, up 20 cents or 1.1 percent from Monday's closing price of $18.04.