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August 18, 2008

BearingPoint posts quarterly rise following a year of job cuts

BearingPoint, the former KPMG Consulting firm, has posted its first quarterly net income increase in more than three years.

The consultancy, which specialises in financial services, revealed its second quarter 2008 net revenue was $694 million compared to $685.8 million in the second quarter of 2007, an increase of 1.2 percent. Net income was $18.5 million compared to a loss of $64 million in the second quarter of 2007.

BearingPoint’s UK director of communications James Clark said the positive results are signs that a long-term global strategy, instituted by chief executive Ed Harbach, is turning the business around.

“We have concentrated our efforts in those areas of business where we do the most work for the most profit. These include the public sector business and in Europe, Middle East and Africa (EMEA), particularly in the financial services sector,” he said.

“What we have done globally is try to move away from the lower level pieces of business at a given practice and focused our firepower on the big ones,” he said.

In the past year, BearingPoint has been shedding senior staff to professional services firms including Deloitte, Alvarez & Marsal and Grant Thornton. BearingPoint reported the company’s billable headcount had dropped more than 9 percent to 13,400 in the past 12 months. Clarke said this is partly due to redundancies in the US financials services practice.

“The company can’t afford to have a staff as large as it did there,” he explained. “We have tried in the majority of cases to put those people into new areas of the business, but in some cases they have chosen to go elsewhere because they are particular experts in a field where there isn’t a lot of revenue. A lot of it is around that. Part of it also was that our business in Spain was sold off last year, so those numbers reflect that as well.” The Spanish business comprised of about 400 staff.

Clarke said BearingPoint isn’t worried about staff moving across to professional services firms. BearingPoint’s voluntary attrition rate is about 26 percent, which Clarke claimed isn’t unusual in the consultancy field.

He said professional services firms with particularly strong consultancy practices, like Deloitte, are competitors when it comes to financial services strategy, but not so much in strategic transformation, where BearingPoint tends to focus.

“To sum it up, we tend to do long term transformation projects with our clients on site with staff in the building rather than coming in for a period of two months, setting a strategy and leaving,” he said.

The latest quarterly results may hint at a comeback for the previously troubled consultancy, however BearingPoint’s future direction in terms of ownership remains unclear. The firm is considering options to sell some or all of its business.

“I don’t think there is any concern about the long term future of the business,” Clarke said, but added: “Who knows how the business will look in terms of its ownership in three to five years time.”

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