Razorfish Reports First-Quarter Profit, Sees Stability

Razorfish

"We are showing signs of stability in an economic environment that remains challenging," Maheu told analysts during an earnings conference call Wednesday morning. "At the same time, we continue to improve operational efficiency."

For the quarter ended March 31, Razorfish reported pro forma income of $900,000, or 1 cent per share, on sales of $10.8 million. That compares with a loss of $6.6 million, or 7 cents per share, on sales of $43.7 million for the same period last year. First Call reported no coverage for the company during the recent first quarter.

Razorfish stock doubled, to 32 cents per share, in high-volume trading following the earnings announcement.

Razorfish stock has been trading at about 14 cents per share in recent months, compared with a high of $56.94 in February 2000. To survive the Web integrator and consulting market collapse, the company closed offices and downsized to 300 employees from about 2,000 at the beginning of 2001.

Maheu said the company now stands at about 270 employees working from offices in Boston, New York, San Francisco, Silicon Valley and Los Angeles. The lumps and bruises are beginning to pay off.

Razorfish has refocused and continues to leverage its existing technology investments into specialty enterprise portal development, dubbed "Razorfish 2.0." The company has also leveraged partnerships with vendors such as Plumtree and Microsoft, and has built a body of client work that's attracting new customers.

Maheu outlined several new clients who signed on in Q1 during Wednesday morning's earnings call with analysts. The new clients include John Wiley, Microsoft, Fortis and a specialty chemicals manufacturer. Existing clients who signed on for more work during the quarter include Genentech, Cisco Systems, Western Union, Legg Mason and Ford Motor Co.

The company reported Q1 gross margins of about 45 percent, before reimbursements for direct costs. Total liabilities, said Maheu, were reduced during the quarter by more than $5 million due to payments and a reversal of about $1.7 million for previously recorded restructuring reserves related to real estate.

Razorfish anticipates revenue of $10.3 million to $11.3 million, before reimbursements for direct costs, and pro forma income of $500,000 to $1 million for the second quarter of 2002.