European Doubts and Write-Down Spoil ISG Figures

Information Services Group, which owns outsourcing consultancy TPI, has announced flat revenue for the third quarter of 2010, after a recovery last quarter; and a large operating loss resulting from a $52.5m goodwill impairment charge.

ISG, formed as an acquisition vehicle in 2006 by former VNU Chief Exec Michael Connors, had a rough 2009 but stabilised revenues in Q1 of the new financial year and managed 6% growth in Q2.

In the latest figures the company reports total revenues of $32.2m, down $0.3m from the same period in 2009, and adjusted EBITDA of $3.5m - 11.7% of fee revenue - down from $5.4m (18.1%) a year earlier. Adjusted net income was $152,000, or $0.00 per share, compared with $2.2m, or $0.07 a year previously.

A GAAP operating loss of $51.9m was attributable to a $52.5 million goodwill impairment change resulting mainly from share price falls and reduced sourcing activity levels due to the difficult global economy. Q3 2009's operating loss of $4.2m included a smaller impairment charge, of $6.8 million.

Reported fully diluted earnings per share (EPS) of ($1.61) compared with ($0.11) for the third quarter of 2009; fully diluted adjusted EPS of $0.00 was down from $0.07 in the prior year.

In his statement, Chairman and CEO Connors pointed to 66% reported revenue growth in Asia Pacific of 66% and continued growth in the Americas, along with major contract wins, as signs of optimism for the coming year and said the company was well-placed to benefit from an upturn, but acknowledged the effect of the uncertain economic and financial climate in Europe, where 'companies continue to defer some sourcing decisions' and revenue fell 14% at constant currencies.

Based in Stamford, Connecticut, ISG is online at www.informationsg.com ; TPI is at www.tpi.net .