As income slows, Harte-Hanks turns to digital growth
Harte-Hanks Inc. has reporteda 2007 net income of $92.6 million — a 17.1% decrease from the 2006 figure of $111.8 million.
The significant decrease was attributed to ongoing poor performance from the company's Shopper business, a weekly circular sent to households in Florida and California. The business saw a 15.8% decrease in operating revenue over the last quarter and a 9.4% decrease in operating revenue over the last year.
During a conference call regarding the results, company president Dean Blythe said Harte-Hanks' cost-cutting measures were not sufficient enough to make up for the revenue loss. He acknowledged that the company's direct marketing segment was healthier — with a 3.2% revenue increase for 2007 — but said this “was a rate less than we believe we can generate from this business over the longer term.” The company said it is looking to further streamline its business.
Last week, in an effort to strengthen its international footprint and digital offering, Harte-Hanks Inc. acquired UK-based digital marketing agency Mason Zimbler Ltd.
“The deal is a bit more strategic,” said Gary Skidmore, president of Harte-Hanks Direct Marketing. “Spending in the digital arena is growing. This allows us to more readily to take part in that. It broadens our capabilities internationally to give us more of a similar offering overseas as we have in the US.”
Mason Zimbler provides technology companies with a range of integrated digital marketing services, including direct marketing, advertising and branding as well as media planning and buying, research and other services.
This complements a recent deal with Information Arts to provide analytics and data services for Harte-Hanks customers in the EMEA region.
The acquisitions support Harte-Hanks' strongest sector. Last quarter, its hi-tech/telecom vertical reported “strong year-over-year double-digit revenue growth,” according to Doug Shepard, EVP and CFO. Its financial vertical also had growth, while the retail vertical and pharma/healthcare both saw downturns this quarter.
“Before this acquisition, for our technology customer, we offered technology databases, we had call center services, fulfillment services and a channel management solution,” Skidmore explained. He added that the first priority for Harte-Hanks Direct Marketing was to extend the digital services from the acquisition to existing customers