CTG’s 3rd-quarter profits dip 23%
Computer Task Group’s third-quarter profits tumbled by 23 percent as the recession cut into the Buffalo-based information technology company’s staffing and solutions businesses.
But CTG executives said Tuesday they believe that the slide in revenues, which reached 25 percent in the third quarter, is beginning to level off. They pointed optimistically to six new electronic medical records projects that the company won during the summer.
CTG’s profits slid to $1.6 million, or 10 cents per share, from $2.1 million, or 13 cents per share, a year earlier. The earnings were slightly higher than the July earnings guidance of 7 to 9 cents per share.
Revenues fell by 25 percent, to $66.8 million, from $89.1 million, as sales at its staffing business, which accounts for two-thirds of its revenues, dropped by 30 percent.
CTG executives expect revenues and earnings to stabilize at roughly the same level in the current quarter. The company forecasts that earnings per share during the fourth quarter will range between 9 and 11 cents, down by 33 percent from a year ago. They predict that revenues will be between $67 million and $69 million, down by 18 percent from a year ago.
While the recession is crimping spending on information technology overall, a bright spot is in the health care industry, especially with the push to develop electronic medical records systems.
“We are seeing demand increase in the health care market for electronic medical records support,” James R. Boldt, CTG’s chairman and chief executive officer, said in a statement.
CTG won six new electronic medical records contracts in the summer and is rolling out a new software product, developed in conjunction with the University at Buffalo, to track the treatment of patients with chronic kidney disease. But overall, Boldt said, funding for electronic medical records projects has been slow to secure.
As a result, he said, electronic medical records work likely will not pick up until next year, although Boldt still believes that it could provide solid growth for its health care market over the next several years. CTG’s health care business accounted for almost a quarter of the company’s revenues during the third quarter.
CTG also said that it spent $1.66 million to repurchase 255,000 shares of its stock during the third quarter at an average price of $6.53 per share.
The company’s shares rose by 17 cents Tuesday to close at $7.56.
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