Computer Task Group, battered by a continued slump in spending on information technology products, said its fourth-quarter profits plunged by 92 percent, but the company's top executive predicted better days ahead.
The Buffalo-based information technology company's earnings during the fourth quarter were in line with analyst expectations, but Darrell L. Jennings, CTG's new chairman, president and chief executive officer, said profits this year should begin to rebound.
"CTG is in an excellent position as information technology spending increases," Jennings said Monday. "We expect to resume revenue growth and return to profitability in the second half of 2001."
CTG forecast that its profits this year would range between $3.2 million, or 20 cents per share, and $4.4 million, or 27 cents per share. That would be a major improvement from the company's loss of $5.7 million, or 35 cents per share, last year, but less than the 31 cents analysts were expecting.
CTG, coming off a year that saw its revenues plunge by 27 percent to $346 million, also said it expects its sales to rebound by 10 percent to 14 percent this year to between $380 million and $395 million.
But the turnaround won't come immediately. The company said it expects to lose money again during the current quarter as its revenue stream continues to sag.
CTG forecast that it would lose between $1 million, or 6 cents per share, and $1.5 million, or 9 cents per share, during the first three months of this year as the company proceeds with a reorganization that focuses the company's operations around technology applications management and staffing.
CTG said it expects its first-quarter revenues to remain weak and range between $76 million and $79 million.
The first quarter earnings forecast was worse than the 3 cents per share profit that analysts surveyed by First Call Corp. were expecting. CTG said it expects to have a small loss or break even during the first six months of this year.
"CTG's results for the quarter and year are indicative of a very difficult business environment for information technology service providers," Jennings said. "CTG will strive to do fewer things better as our new practices are launched this year."
During the fourth quarter, CTG's profits plunged to $171,000, or 1 cent per share, from $2.16 million, or 13 cents per share, a year ago. The company's revenues fell by 28 percent to $83.4 million from $115.4 million.
As part of the reorganization, CTG dropped Zenius, the e-commerce unit that it launched last year to harness what was then a boom in Web development projects. CTG will continue to perform Web development for clients as part of its overall computer development services.
The company also dropped two other business units created with Zenius to handle CTG's core business: Exemplar, for non-Web systems development; and IT Capital, for computer staffing.
Instead of the various business unis, CTG now is marketing its services under its own name.
CTG's stock, which has lost 61 percent of its value over the last year, fell 62 cents to $5.73 in late morning trading..