Forrester Research Meets Financial Guidance For Fourth-Quarter And Full-Year 2001
Forrester Research, Inc. (Nasdaq: FORR), a leading provider of research and analysis on emerging technologies, today announced its fourth-quarter and year-end 2001 financial results. In a separate release issued today, Forrester also announced that it has appointed Warren Hadley as its new chief financial officer and Timothy J. Moynihan, Esq., as general counsel, succeeding Susan Whirty Maffei, Esq., who will remain as a consultant to Forrester for special projects with the chief executive officer and board of directors.
Fourth-Quarter Financial Performance
- Fourth-quarter 2001 total revenues were $34.7 million, compared with $47.9 million for the fourth quarter of last year.
- Net income was $4.9 million, versus $7.3 million for the fourth quarter of 2000.
- Net income per diluted share was $0.21 in the fourth quarter of 2001, compared with $0.30 for the same period a year ago.
Full-Year 2001 Financial Performance
- Total revenues for 2001 were $159.1 million, compared with $157.1 million in 2000.
- Pro forma net income was $20.2 million in 2001, versus net income of $21.6 million in 2000. Pro forma net income excludes a $3.1 million third-quarter charge related to a workforce reduction. Including the charge, Forrester reported net income of $18.1 million for 2001.
- Pro forma net income per diluted share was $0.84 for 2001 compared with net income per diluted share of $0.88 in 2000. Pro forma net income per diluted share excludes a $3.1 million third-quarter charge related to a workforce reduction. Including the charge, the company reported net income per diluted share of $0.76 for 2001.
Forrester Meets Fourth-Quarter Expectations
“In July 2001 we initiated a series of major steps to improve Forrester’s profitability and cash flow while preparing the organization for a period of rapid evolution in our research products and client relationships,” said George F. Colony, chairman of the board and chief executive officer. “As a result, we were prepared for the continuing recession and weakness in the technology market, and we were successful in meeting both our top-line and bottom-line goals for the fourth quarter.
Colony continued, “Near the quarter’s end, we began to see indications that large companies may be considering some easing of their technology budget constraints as we added new clients to our Global 3,500 target customer base. In addition, we are making good progress in executing on our 2002 business plan. This plan includes further operating cost reductions as well as major product initiatives. On the product front, we recently launched WholeView Research, a seamless and unified approach to research that is aligned with our clients’ needs in this challenging economic environment.”
Fourth-Quarter Client Wins
“One of our strategic moves in mid-2001 was the reorganization of our sales force,” Colony said. “To meet the need for greater sales force specialization in a more complex market, we began by restructuring Forrester’s sales organization around key vertical markets and client revenue segments. This enabled us to get closer to our clients and gain greater insight into their needs, which proved invaluable during the fourth quarter as economic conditions remained tight. We posted a number of important new customer wins as a result, including such Global 3,500 companies as Gillette, Wellpoint Health, and Avnet. We were also successful in securing renewals with a number of existing major clients, including Bank One, Chevron, Colgate-Palmolive, Pfizer, Wachovia, and others.”
Corporate Reorganization Gains Traction
“Another 2001 strategic initiative was focused on improving Forrester’s operating velocity and our ability to drive product innovation, client satisfaction, and profitability,” Colony continued. “To accomplish this, we reorganized into four operating groups — Global, North America, Europe, and Asia — each led by a highly experienced managing director and each working toward specific financial objectives. This organizational initiative was key to Forrester’s meeting our financial performance targets for the fourth quarter of 2001. In addition, the restructuring is building forward momentum as we begin 2002.”
Forrester Introduces WholeView
“The sales force and corporate reorganizations set the stage for our initiative to revolutionize technology research — WholeView,” Colony said. “This new model offers our clients a comprehensive, simple, and accessible solution that seamlessly integrates a variety of Forrester research and service offerings.
“Using WholeView, Forrester clients get convenient access to research from Forrester’s three core products — Technographics®, TechStrategy™, and TechRankings™ — at one integrated Web site,” Colony continued. “With WholeView, clients in IT, marketing, and lines of business can research, analyze, and make decisions about critical technology issues in real time. The feedback on WholeView has been extremely positive. The product aims directly at the widely perceived need for more comprehensive solutions in today’s complex and highly competitive environment.”
Forrester Meets Customers’ Needs With New Offerings And Events
“During the fourth quarter, we continued to enhance TechRankings by introducing Forrester’s eighth category, eProcurement Application,” Colony said. “With the addition of eProcurement Application, TechRankings now helps clients select the best application to streamline their online purchasing processes and reduce costs. Two new additional TechRankings categories are planned for 2002, as are updates to the existing categories.
“The Forrester fourth-quarter Events calendar was extensive,” Colony said. “We held our Retail Forum Europe in Paris, the Executive Strategy Forum in Boston, and the Financial Services Forum Europe in London. In light of corporate travel restrictions in the weeks following September 11, we replaced our Healthcare Forum with a series of three conference calls. Our client feedback on the calls was extremely positive, and we exceeded our attendance expectations for this new venue.
“Our 2002 schedule features 15 Events,” Colony continued, “including six Forums and nine Summits. Our first event will be held in February, when we host the Forrester Technology Leadership Forum in Scottsdale, Arizona. Innovations in Web services technology — and the ability of these innovations to lower integration costs and improve productivity while preserving the value of legacy IT systems — will be a key focus for the Scottsdale Forum. Following this event, we plan to hold two Summits during the first quarter, Automotive and Retail.”
“Forrester’s fundamentals remain strong as we begin 2002,” said Colony. “Technology change is a relentless, inexorable force. And helping companies leverage technology change to drive revenue, profit, and market share continues to be a powerful business. However, the global downturn in technology spending has suppressed this dynamic to a considerable degree over the past year. Given Forrester’s ratable revenue recognition business model, our 2002 results will reflect this weakness.
“To align the size of our organization with the level of business we anticipate for 2002, earlier this month we announced a workforce reduction,” Colony continued. “We expect this to result in the elimination of approximately 126 jobs, or about 22 percent of our worldwide workforce. Approximately $18.0 million to $20.0 million in annualized cost savings are anticipated as a result.
“Looking further ahead, Forrester’s financial strength, premium brand, and strong client base together position the company for accelerated performance once the economy begins to recover,” Colony said. “We have more than $200 million in cash on our balance sheet, coupled with a long record of conservative financial management. In addition, Forrester owns the premium brand in the technology research business — over the years, we have earned the trust of a large roster of Global 3,500 clients. With WholeView, we have a product that can truly enhance our clients’ ability to thrive on the technology changes to come.”
Forrester’s guidance for the first quarter and 2002 fiscal year assumes no improvement in the state of the economy and does not include one-time charges related to the workforce reduction announced in January 2002, which the company expects to be in the range of $4 million to $6 million.
- Total revenues of approximately $25.5 million to $27.5 million.
- Diluted earnings per share of approximately $0.13 to $0.15.
- Total revenues of approximately $100.0 million to $105.0 million.
- Operating margin of approximately 10 percent to 12 percent.
- Diluted earnings per share of approximately $0.50 to $0.55.
- Diluted weighted average shares outstanding of approximately 24 million to 26 million.
- 2002 effective tax rate of approximately 30 percent.