Newspaper article The Florida Times Union

Modis Forecast Better Analysts Raise '99 Projections

Newspaper article The Florida Times Union

Modis Forecast Better Analysts Raise '99 Projections

Article excerpt

Analysts yesterday raised their 1999 earnings projections for Modis Professional Services Inc. after the company's New Year's Eve announcement of what it called an "integration and strategic repositioning" plan.

Although Modis said it will cut costs by closing 23 of its 265 offices, analysts said the main reason for the new earnings forecast was Modis' announcement that it has repurchased about 23 million of its shares, representing 19 percent of its outstanding common stock.

"That was significantly more [shares] than I was expecting," said Matthew Roswell, analyst at Legg Mason Wood Walker.

By repurchasing shares and taking them off the market, a company makes its remaining shares more valuable. Earnings per share are calculated by dividing total earnings by the number of shares outstanding. If there are fewer shares outstanding, the earnings per share figure will be higher.

The consensus forecast of 12 analysts surveyed by First Call Corp. had called for Modis to earn $1.07 a share in 1999. The average of nine analysts who updated their forecasts yesterday was raised to $1.15 a share.

Jacksonville-based Modis, a professional staffing and information technology consulting company, also announced Thursday that the net effect of closing the 23 branches would be an annual increase in $11.7 million in pre-tax operating income and $7.3 million after taxes.

Modis will cut about 290 of its 3,500 jobs worldwide, but Chairman, President and Chief Executive Officer Derek Dewan said Jacksonville will not be affected. Actually, Jacksonville could see a net increase in jobs as some operations are consolidated, he said.

Because of the branch closings, Modis expects to take onetime charges against earnings totaling $27 million to $30 million in the fourth quarter of 1998. Aside from those charges, earnings should meet or exceed analysts' forecasts of about 22 cents a share for the quarter. …

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