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LINCOLNSHIRE, Ill.--Hammered by big charges and deteriorating profits in its business process outsourcing unit, Hewitt Associates Inc. reported a loss for fiscal 2006--its first since it went public four years ago.
For the fiscal year ending Sept. 30, Hewitt reported a net loss of $115.9 million vs. net income of $134.7 million the prior year.Russell Fradin, Hewitt's chairman and chief executive officer, said in a statement that Hewitt "significantly under-delivered" on its financial objectives, with "deterioration in the expected profitability of some of our HR BPO contracts."
Net revenues--which exclude reimbursements paid by clients for expenses Hewitt incurred--fell slightly in 2006 to $2.79 billion, off from $2.83 billion in 2005.
Net outsourcing revenues slipped to $1.98 billion, down from $2.05 billion. However, consulting revenues--aided by increased demand for actuarial consulting services, especially in Europe, and talent-related and communications consulting services--bucked the trend, rising to $842.6 million from $802.8 million.
For the fourth quarter of 2006, Hewitt reported net income of $23 million, down from $40.5 million in the comparable period for 2005.
Hinting at possible changes in its business strategy, Mr. Fradin, who in September took over at the helm of Lincolnshire, Ill.-based Hewitt following the retirement of longtime head Dale Gifford, said Hewitt's near term focus will be on accelerating growth in its benefits outsourcing and consulting businesses, while "redefining our approach to the HR BPO business."