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CTG profits rise 24% as solutions work grows

Growth in its computer "solutions" business helped Buffalo-based Computer Task Group increase its second-quarter profits by 24 percent, even as the Buffalo information technology company's sales dropped by 7 percent.

The increase in profits comes from an increase in the higher-margin "solutions" business of taking charge of an information technology project. CTG's profits jumped to $999,000, or 6 cents per share, from $808,000, or 5 cents per share, a year ago.

CTG's earnings were bolstered because more hospitals and health insurance companies hired teams of CTG workers to fix specific problems, such as making a new kind of software fit into a system, or building a new system.

But CTG's overall revenue for the three-month period fell to $80.1 million from $85.8 million because of weakness in its staffing business.

CTG also narrowed its earnings forecast for the full year, predicting that profits will come in between 25 cents and 29 cents per share, shaving a penny off each end of the range. That would be a 19 percent to 38 percent increase in annual profits from 2006. Because of the lower-than-expected demand for its staffing services, CTG trimmed its revenue forecast by as much as 6 percent, predicting annual sales of $320 million to $330 million this year, down from its previous forecast of $341 million.

CTG said it expects to earn between 5 cent and 7 cents per share during the third quarter.

A quarter of CTG's revenues come from health-care related clients, said James Boldt, the company's chairman and chief executive officer.

"We're making investments in the health care business, which is what's causing it to grow faster," he said. "Health care is going to become a bigger part of the [economy] . . . The population is aging."

CTG has 3,300 employees in 35 offices in the U.S. and one in Toronto. Four offices in Europe handle 22 percent of the company's client business.

Growth in earnings is part of a continuing company pattern reflected in a new magazine ranking as one of the nation's 100 fastest growing high-tech companies. The June issue of "Business 2.0" put CTG in 69th place, ahead of No. 92 Ebay.

"We didn't make the list last year," Boldt said.

e-mail: mkearns@buffnews.com

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