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Harte-Hanks’ third-quarter income falls

Direct marketing firm Harte-Hanks Inc. reported Oct. 26 that its net income decreased 4 percent.

For the three months ended on Sept. 30, net income was $287.6 million. Earnings increased 4.6 percent, from $294.7 million this year versus $281.7 million last year. Operating income decreased 8.2 percent-from $44.6 million this year versus last year’s $48.6 million. Third quarter 2006 results include stock-based compensation of $1.9 million.

Richard Hochhauser, CEO of Harte-Hanks, said direct marketing revenue in the quarter was $174.1 million, up 3.1 percent from the prior year’s period, while operating income was down $1.1 million, or 4.2 percent.

In addition, all of the company’s vertical markets had year-over-year growth. Pharmaceutical/healthcare led the way with low double-digit growth, while retail, high tech/telecommunications and financial verticals were each up in the low single digits.

At the end of the quarter, Harte-Hanks completed its acquisition of the Aberdeen Group. The company also recently divested of a print operation of similar size that had become increasingly less important to the solutions it offers its direct marketing customers.

Mr. Hochhauser said shoppers delivered uneven performance in the quarter. While revenue continued solid growth of 6.8 percent, operating income declined by 11.6 percent.

Mr. Hochhauser said its outlook, for the rest of 2006 continues to be positive, as the company’s businesses continue to be profitable and generate significant amounts of free cash flow.

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