UPDATE 2-Heidrick & Struggles cuts '08 revenue view, shares fall
(Recasts; adds details, analyst comments; updates share movement)
By A.Ananthalakshmi
BANGALORE, Oct 14 (Reuters) - Executive search firm Heidrick & Struggles International Inc (HSII.O) cut its 2008 revenue outlook due to a weak economy and its significant exposure to the financial industry, sending its shares down 8 percent.
"Heidrick is negatively impacted by a weakening macro environment, which is resulting in reduced demand for their services," Robert W. Baird analyst Mark Marcon said by phone.
There has been a rise in the number of companies that are imposing hiring freezes, and Heidrick is more impacted than other search firms as it has a higher level of exposure to the financial industry, Marcon said.
Financial services accounted for about 27 percent of second-quarter revenue at the company, whose financial clients include Citigroup (C.N), Washington Mutual (WM.N) and Friends Provident FP.L.
Heidrick, which has about half its sales from international market, will also be affected by a weakening environment in Asia and hiring cutback by other industries, Marcon said.
The analyst said he sees a significant pullback in revenue for the third quarter and a steeper decline in the fourth for the company.
Heidrick shares fell $1.99 to $23.79 in midday trade on Nasdaq. Shares of the other executive recruiter Korn/Ferry International Inc (KFY.N) were down 9 percent on the New York Stock Exchange.
LOWERED OUTLOOK
Heidrick now expects net revenue of about $630 million for the year ending Dec. 31, down from its previous forecast of between $650 million and $660 million.
Analysts on average were expecting revenue of $641.6 million, according to Reuters Estimates.
The company, which has seen a fall in the number of recruitments for at least two straight quarters, expects operating margin of about 10 percent, compared with its prior view of about 13 percent.
Analyst Marcon, who has an "underperform" rating on the stock, said he does not expect the outlook to improve till late 2009. (Additional reporting by Mary Meyase; Editing by Deepak Kannan)
