As income slows, Harte-Hanks turns to digital growth

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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

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