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by Vault Consulting Editors | November 17, 2008


Following up on a third quarter of diminished earnings (and a 7.1 percent decrease compared to third-quarter 2007, BearingPointers had a sluggish start to their week. The firm was informed on Friday that its common stock would be suspended from trading on the NYSE due to its "abnormally low" price. Shares closed on Friday at $0.06, and are now down to $0.03 - ouch. According to NYSE regulations, a company may not fall below the minimum average closing price of $1 for 30 consecutive days. Unfortunately, BearingPoint is no stranger to sluggish finances, having gone through earnings restatements every year from 2002 to 2005, undergoing an SEC investigation in 2005, and sluggish stock prices through 2007. But they're still here to tell about it.

BearingPoint's third-quarter report showed improved operating income and margins, despite flat to decreasing revenue. (The one upside to a low stock price? Less expenditures.) In October, the firm brought AlixPartners onboard to help restructure its debt and help manage its balance sheet. Although some talk of a possible merger or sale did circulate, it seems the company is now more focused on internal debt restructuring efforts.

As a company whose name and logo are meant to reflect the concept of "setting direction to an end point," it looks like BearingPoint is in need of some direction itself. In wrapping up the third-quarter earnings report, the firm states that, "given the recent dramatic changes in global financial and credit markets and the continuing pressures that these events have placed on the Company's share price, the Company is no longer confident that it can assess the near-term implications that these developments will have." CEO Ed Harbach adds, "We are uncomfortable trying to predict how client demand and the perceptions of entering into long-term engagements with BearingPoint will affect our financial position for the remainder of the year. We've factored a number of considerations into our decision, including: the speed at which our clients are making decisions based on their own outlook; the uncertainties that we face while we resolve issues such as our own noncompliance with New York Stock Exchange continuing listing standards; and our view that we increasingly believe a strategic transaction or restructuring of our indebtedness will be necessary for us to continue to fund our 2009 operations and debt obligations."

Unisys can relate. Last week, it was also booted from the NYSE, after the value of the stock has dropped over 80 percent so far this year. And not only that: It was also replaced on the S&P 500 by savings and loan holding company People's United Financial Inc.


Filed Under: Consulting

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