After reporting disappointing 1Q2016 results, Ciber, Inc. (NYSE: CBR) is looking to more cost-cutting to at least match expenses with shrinking revenues. More staff retrenchment and divestment of non-core assets are some of the areas management is targeting to lower costs.
Ciber, Inc. (NYSE: CBR) logged adjusted EPS loss of $0.13 in 1Q2016, sharply down from EPS profit of $0.05 in the corresponding quarter a year ago. Analysts expected EPS profit of at least $0.01 for the latest quarter.
Revenue reading of $175 million shrank significantly from $202 million a year ago and fell well short of the consensus estimate of $196 million.
What caused the serious impact?
Management blamed soft bookings in 1H2015 and a wave of reorganization measures for the week 1Q2016 results.
Will there be improvement in the future?
Ciber, Inc. (NYSE: CBR)’s CEO Michael Boustridge tried to sound optimistic during the company’s earnings call with analysts. Equally confident of the future of the company is CFO, Christian Metzger, who said that jumpstarting revenue after years of poor execution can take considerable amount of time. But he provided hints that Ciber was coming out of the woodwork.
Where will redemption come from?
Ciber, Inc. (NYSE:CBR) has set in motion a number of cost-cutting programs. One of them is headcount reduction. The company originally targeted to take out $5 million from its SG&A expenses in 2016, but now insiders say the company could exceed that target. Layoff is expected to play a major role in the reduction of SG&A costs.
At the same time, Ciber will be asking the board for approval to dispose of certain non-core assets. Slimming has already begun at Ciber with the company planning to offload its Australian operation to the local management. The Australian business generates annual sales in the vicinity of $10 million, but it remains a loss-making machine.
When Boustridge joined Ciber, Inc. (NYSE:CBR) about two years ago, he outlined a restructuring plan that would eliminate $27 million in cost through layoffs and other measures.