UPDATE 2-Korn/Ferry posts slimmer-than-expected Q1 loss, shrs up

* Q1 adj loss $0.05/shr vs est loss of $0.06/shr

* Total revenue falls 43 pct

* Says labor markets remain uncertain

* Shares open up 11 pct (Recasts; adds details, share movement)

Sept 9 (Reuters) - Executive search firm Korn/Ferry International (KFY.N) posted a quarterly loss that was a cent narrower than market estimates, helped by lower expenses, but said the economic crisis continues to have a significant impact on many of its clients' hiring plans.

Shares of Los Angeles-based Korn/Ferry opened up 11 percent, before paring some gains to trade up 8 percent at $14.38 in early trade on the New York Stock Exchange.

Korn/Ferry, which competes with Heidrick & Struggles International Inc (HSII.O), said although demand for its services began to stabilize in the first quarter, the macroeconomic climate and labor markets remain uncertain.

A recent survey of about 28,000 U.S. companies had shown that employers plan to hire fewer workers in the last three months of 2009 than in the current quarter. [ID:nN08275600]

Demand for executive searches and leadership and talent consulting services has declined precipitously throughout the world during the second half of fiscal 2009, the company said.

Korn/Ferry expects fee revenue of about $110 million to $120 million in the second quarter, based on new business confirmed subsequent to the end of the first quarter and on anticipation of a drop in new business due to summer seasonality.

The company, which operates throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, had recorded fee revenue of $189.3 million in the year-ago second quarter.

Given the uncertain economic environment and labor markets, making a meaningful prediction about earnings remains impractical, the company said in a statement.

SWINGS TO Q1 LOSS

For the first quarter ended July 31, the company posted a net loss of $14.3 million, or 33 cents a share, compared with net income of $15.9 million, or 36 cents a share, a year ago.

Excluding a restructuring charge, the company posted a loss of 5 cents per share.

Total revenue fell 43 percent to $123.3 million in the quarter. Fee revenue also fell 43 percent to $116.8 million, including the impact of exchange rates.

The number of executive search engagements opened were down 30 percent and the average fee billed per engagement fell by about 16 percent, the company said.

Analysts on average had expected the company to post a loss of 6 cents a share, before special items, on revenue of $102.6 million, according to Reuters Estimates.

General and administrative expenses fell more than 17 percent to $28.1 million in the quarter. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Gopakumar Warrier, Himani Sarkar)