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The company lowered its 2006 outlook due to higher-than-expected compliance expenses.
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BearingPoint reaffirms FY06 revenue forecast, lowers income guidance
BearingPoint lowered its 2006 guidance to the range of $150 million to $200 million in operating income, down from a previous forecast of $180 million to $250 million, with an operating margin of 5.3 to7.4%. The company hopes to reach 10% operating margin by late 2007.
The company backed previous guidance for $3.5 billion to $3.7 billion in revenue for 2006.
BearingPoint said its revised forecast includes $80 million to $120 million in costs related to its audit, the filing of its 2005 annual report, increased compliance staff and infrastructure costs, and up to $25 million in non-cash lease facilities restructuring charges.
Bearing Point said that bookings increased 15% from the year ago quarter to reach $800 million. It highlighted strong bookings in its Public Services segment, which was awarded a number of important contracts including implementation of payroll and personnel systems for the State of California and application services development for San Diego County.
The company now sees cash balance of $450 million to $600 million below earlier outlook of $550 million to $650 million.
Commenting Chief Executive Officer Harry You said: "As we have stated, we remain focused on resolving our infrastructure and process issues with the goal of becoming current in our SEC filings by later this year. The actions we are taking now will enable us to move forward faster with a streamlined infrastructure and stronger systems to support our business strategy. We are pleased to see the strong performance in our core business affirming this strategy and our dedication to service with our clients."
You said the European operation is "particularly robust". Furthermore, the German operation, which accounts for about half of European revenues, is being helped by the economic upturn. You characterized the French operation as “solid” and said that the UK is in "growth mode". The Nordics operation is doing well with a high-end business-consulting offering, according to You.
Investors seemed to like the update; BearingPoint's shares were up 10% to $9.37 following the release of the market update.
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