The company reported fiscal 2001 third quarter revenue (including revenue from the Yankelovich custom research group acquired effective February 1, 2001) of $15.8 million, an 11% increase compared with $14.2 million in the third quarter of fiscal 2000. Internet revenue represented $7.5 million or 47% of total fiscal 2001 third quarter revenue, as compared to $ 6.5 million or 46% in the fiscal 2000 third quarter. Net loss was $0.17 per share ($5.9 million), flat when compared to the third quarter of fiscal 2000.
Our fiscal third quarter results, which are in line with our revised projections, reflect the impact of the slowing economy, offset somewhat by our focus on cost-controls, stated Dr. Gordon S. Black, chairman and CEO of Harris Interactive. As previously reported, a number of our major clients decided to hold-off on prior research commitments during the beginning of the economic uncertainty. As a result, our revenue growth has been tempered, but we are taking the necessary steps to align our costs with current economic realities. Despite the current environment, we have already seen some reinstatement of postponed research work. As the economy begins to recover, we believe we will be in a strong position to benefit as our diversified clients ramp-up their research efforts.
Despite the current economic conditions, the company remains committed to achieving positive cash earnings by the end of calendar 2001. As such, Harris Interactive has stepped-up its cost-cutting program that includes a reduction in its national workforce by approximately 70 employees or 12% of its full-time professional employees effectively immediately. After payment of severance during the fourth quarter, annualized cost savings associated with these reductions will be approximately $4.5 million. Additionally, the company plans to consolidate office space, reduce database development costs, and scale telephone center operations consistent with current demand. When fully implemented, the employee reduction and office consolidation program is expected to reduce the Company’s cost base by approximately $10 to $12 million. Management expects this process to be completed within six months.
We are taking the necessary steps to decrease our costs and align them with our revised revenue forecasts, continued Dr. Black. The decision to reduce our workforce was very difficult, as we have a dedicated group of employees that are among the industry’s most talented professionals. Unfortunately, like many other companies, we now have to take decisive action to ensure that our business is operating as efficiently as possible.
Business backlog for the Internet increased to $12.4 million on March 31, 2001 up from $8.7 million on December 31, 2000. In addition, our balance sheet remains strong with approximately $47.0 million in cash and marketable securities with no long-term debt.
Fiscal 2001 Fourth Quarter Forecast:
Consistent with previous guidance, Harris Interactive expects that operating losses will remain in the $0.17 to $0.19 per share range for the fourth quarter ended June 30, 2001 due to uncertainty concerning soft market conditions.
