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Not long ago, Korn/Ferry International (NYSE: KFY) was growing nicely. The executive management search company was picking up some juicy fees and benefiting from global growth.
Of course, things are much different now. Basically, corporate clients are watching their wallets.
According to the latest quarterly results, Korn/Ferry posted a loss of $0.52 per share, which compares to a gain of $0.37 per share in the same period a year ago. Although, there was a $16.8 million restructuring charge and a $15.3 million cash asset impairment charge.
Fee revenue came to $136.2 million, which was down 32.3% from the same period a year ago. There was a 33.5% reduction in the number of executive search engagements.
To deal with the current situation, Korn/Ferry has been slashing its cost structure, and it's helping. Quarterly cash flows were $18.3 million and the company has $289.9 million in the bank.
Interestingly enough, Korn/Ferry says it will "accelerate through the economic turn." However, it's not clear what this means. After all, if the company is focused on cutting costs, is it really investing in its future?
Basically, just like with many other companies, the key is for the economy to stabilize so corporate clients will begin to spend money on outside services. Unfortunately, it's far from clear when this will happen.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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