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PROFITS LAG SALES GROWTH IN QUARTER AT CTG

First-quarter sales rose 11.8 percent at Buffalo-based Computer Task Group Inc., propelled by a bigger-than-expected increase in the computer staffing business, the company said Wednesday.

Sales from continuing operations were $68.7 million, versus $61.4 million a year ago, exceeding the company's previous estimates.

During the quarter CTG added 700 "billable staff," or technology professionals that help corporate clients run their computer networks. That exceeded an earlier forecast of 500 new staff.

Sales from Europe grew 26 percent, reflecting work for a large health care industry client that began in 2004.

However, profits from continuing operations fell to 3 cents per share, from 5 cents a year ago. Profit growth will follow after the ramp-up costs of the sales spurt have been absorbed, the company said.

First-quarter net profits were $500,000, compared to a year-ago loss of $3.5 million or 20 cents a share, which included $4.3 million costs from the divestiture of operations in the Netherlands. Excluding the discontinued operations, profits last year would have been $800,000.

CTG provides computer staffing and project support for corporate clients in North America and Europe. Headquartered on Delaware Avenue in Buffalo, it employs 3,200 computer professionals internationally. Its shares rose 16 cents on Wednesday to $3.16 before the announcement.

For the current quarter, CTG said it expects to generate a sales increase of 22 percent to 25 percent, with sales of $72 million to $74 million and per-share profits of 3 cents to 5 cents.

"We will see the full earnings contribution from this growth later after we realize greater efficiencies and all our transitional costs for this significant new business are absorbed," Chief Executive Officer James R. Boldt said in a statement.

e-mail: fwilliams@buffnews.com