Second-quarter revenues fall 19% at Harris Interactive

US-- Harris Interactive has seen a sharp fall in second-quarter revenues – down 19% year-on-year to $50.7m.

Revenues in the US, Canada, the UK and Germany all fell by 20% or more, with the only bright spots for the agency being France and Asia Pacific where sales were up 20% and 83% respectively.

Interim chief financial officer Deborah Rieger-Paganis said almost one-third of the total revenue decline could be attributed to negative currency effects. Stripping those out, she said, the UK was down just 4% (from the reported figure of 26%), Germany 29% (from 36%) and Canada 2% (from 20%).

Operating loss for the three months ending 31 December was $45.9m, compared with income of $3.4m for the same period the year before.

However, this year's figure includes a $40.3m goodwill writedown and $3.9m in severance payments tied to the 51 US jobs that were axed in mid-December as well as other executive departures, including that of former CEO Greg Novak.

Excluding these and other charges, operating income for the quarter would have been $200,000. Novak's replacement Kimberly Till told investors: “We said in October that we needed to act quickly in two areas: to rigorously review our cost structure to align it with our revenues and to recruit top talent to augment our already strong internal teams.

“The cost reductions we made this quarter were a critical first step to restoring profitability in the business and enabled us to reorganise our business structure to support the strategic initiatives we plan to undertake. We anticipate these actions will result in nearly $10m in annualised savings. On the recruiting front, we are making significant progress and expect to have several key hires in place by the end of our fiscal year.”

Harris announced that as of 31 December it was in violation of the leverage ratio and interest coverage covenants of its credit facilities. On 5 February it obtained a 30-day waiver from its lenders, and Rieger-Paganis said, the firm “expects to have an amended credit facility in place by the end of the waiver period”.

Author: Brian Tarran

Related links:

Harris North American boss out as Decima deal value is cut

Exclusive: Kimberly Till promises a fresh approach for Harris

Bolloré's back buying more Harris shares