Hewitt Associates 3Q earnings up 14%

By Dow Jones Newswires
Posted Aug. 5, 2010 at 8:31 a.m.

Hewitt Associates Inc.’s fiscal third-quarter earnings rose 14 percent on an income-tax gain, but adjusted results dropped amid lower margins. The human-resource services company’s performance has improved modestly of late, though charges have weighed on results. It cut costs as unemployment pressured revenue during the recession.

Hewitt has agreed to be acquired by Aon Corp. in a deal valuing it at $4.72 billion as of Wednesday’s close. Big consulting firms, still suffering from recessionary aftershocks, have been seeking to grow through acquisitions.

Hewitt posted a profit of $77.9 million, or 82 cents a share, up from $68.4 million, or 71 cents, a year earlier. Excluding tax and other impacts, earnings fell to 60 cents from 81 cents. Revenue notched a 0.4 percent gain to $746.6 million.

Analysts polled by Thomson Reuters most recently forecast earnings of 74 cents on $744 million in revenue.
Operating margin narrowed to 10.6 percent from 14.7 percent amid sharply higher goodwill and asset impairment expenses.

Revenue in the benefits outsourcing segment, Hewitt’s largest, slid 2 percent as profit dropped 28 percent amid lower project revenue and client losses. Its consulting business saw profit drop 6 percent despite a 6 percent increase in revenue as margin slid.

Hewitt shares closed Wednesday at $49.27 and were inactive premarket.

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