4th Quarter Earnings and M&A Activity in the HR Space

A summary of fourth quarter earnings and M&A announcements, aggregated by HRmarketer.com, are below - the full report can be accessed (for free) at HRmarketer.com's site in the HR Marketplace Earnings section:

• Adecco ( ADO): Reported that its third-quarter net income rose 38% to 164 million euros ($209.4 million). Sales rose 11% to 5.3 billion euros after professional services operations grew sales by 15% and office and industrial operations grew sales by 10%.
• Automatic Data Processing Inc. (ADP): For the quarter ended Sept. 30, the company reported net income of $257.5 million, or 46 cents per share, versus a prior-year profit of $220 million, or 38 cents per share. Excluding a gain on the sale of a dealer services investment, the company would have earned 43 cents per share in the latest period.
• Aon Corp. (AOC): Reported that its third-quarter profit fell 13 percent from last year on a substantial charge and rising expenses. Income for the quarter was $106 million, or 32 cents per share, down from $121 million, or 36 cents per share, in the year-ago period. Revenue for the quarter was $2.17 billion, up 7 percent from $2.02 billion last year.
• Administaff Inc. (ASF): Reported its third-quarter profit increased 69 percent to 43 cents per share, above the analyst consensus estimate of 39 cents per share, as measured by a Thomson Financial poll. Revenue rose 19 percent to $338.4 million from $285.2 million a year ago.
• Gevity HR Inc. (GVHR): Reported its third-quarter earnings fell 11 percent, but came in ahead of the Wall Street consensus estimate. Quarterly earnings slid to $9.6 million, 35 cents per share, from $10.7 million, or 37 cents per share during the same period last year.
• Hewitt Associates Inc. (HEW): Reported its fiscal fourth-quarter profit fell 43 percent, as higher performance-based compensation costs cut into segment income. Net income dropped to $23 million, or 21 cents per share, from $40.5 million, or 37 cents per share, last year.
• Kenexa (KNXA): For the third quarter of 2006, Kenexa reported total revenue of $28.0 million, representing an increase of 63% over the $17.2 million recorded for the third quarter of 2005. Subscription revenue was $23.2 million for the third quarter of 2006, an increase of 73% compared to the third quarter of 2005, while professional services and other revenue was $4.8 million for the third quarter of 2006, an increase of 25% over the same period of 2005.
• Kronos Incorporated (KRON): Reported that total revenue for the fourth quarter of Fiscal 2006 increased to $165.4 million from $149.8 million for the same period a year ago. GAAP net income was $15.0 million, or $0.47 per diluted share, compared to $19.4 million, or $0.60 per diluted share for the same period a year ago.
• TALX Corporation (TALX): Reported that fiscal second-quarter earnings from continuing operations increased 14 percent to $8.1 million, or $0.25 per diluted share, from the year-ago $7.2 million, or $0.21 per diluted share. The increased earnings primarily reflected the contribution from recent acquisitions, revenue gains in The Work Number services, and ongoing emphasis on cost controls.
• Taleo Corp. (TLEO): Reported it trimmed its third-quarter loss with more customers on its client list. The company reported a net loss of $757,000, or 4 cents per share, compared with a prior-year loss of $2.5 million, or $16.74 per share. Excluding restructuring costs, stock-based compensation and other special items, Taleo said it earned 4 cents per share in this year's quarter, up from a penny in similar comparisons to the year-ago period.
• Ultimate Software (ULTI): Announced financial results for its third quarter of 2006. For the quarter ended September 30, 2006, the Company reported $28.8 million in total revenues, a 30% increase compared with the third quarter of 2005. Recurring revenues increased 27% to $16.5 million. GAAP net income for the third quarter of 2006 was $1.3 million, or $0.05 per diluted share, versus GAAP net income of $0.7 million, or $0.03 per diluted share for the third quarter of 2005.
• Workbrain Corporation (WB): Reported Canadian GAAP financial results for the third quarter and nine months ended September 30, 2006. Workbrain reported third quarter revenue of $24.2 million compared with $21.9 million for the third quarter of 2005, an increase of 11.0%, and compared with $22.4 million for the second quarter of 2006, an increase of 8.1%.
• Workstream Inc. (WSTM): Announced its fiscal 2007 first quarter results for the period ended August 31, 2006. All figures are in U.S. dollars. Total revenue for the first quarter was $6,927,000 compared to $6,342,000 in the prior year's comparable period, an increase of $585,000 or 9%. EBITDA loss for the first quarter of fiscal 2007 was $(1,272,000), or $(.02) per share, compared to an EBITDA loss of $(1,974,000), or $(.04) per share, in the first quarter of fiscal 2006. The Company's net loss for the quarter ended August 31, 2006 was $(2,890,000), or $(0.06) per share, compared to a net loss of $(3,838,000), or $(0.08) per share, in last year's comparable quarter.

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Previous Quarter’s M&A Activity:

• ADP® Employer Services (ES), a division of Automatic Data Processing, Inc. (NYSE:ADP - News), a leading provider of outsourced payroll, benefits and HR services, today completed the acquisition of VirtualEdge Corporation, an innovator in the field of recruiting and talent lifecycle management solutions for HR organizations. The acquisition of VirtualEdge significantly expands ADP's Pre-Employment Services suite by providing expert professional recruiting solutions for mid-market, large and global organizations.
• Capital H Group, a rapidly expanding consulting firm headquartered in Chicago, has acquired Lambert & Associates, Inc., a Chicago-based diversity and inclusion consulting firm founded in 1986. Capital H Group, established three years ago, recently closed another round of private equity funding and is building a national consulting firm through acquisitions and organic growth to help companies create more value—through their people—for better business results.
• Ceridian Corporation (NYSE:CEN) today announced that it has acquired Ann Arbor, Mich.-based Leade Health, a leading health coaching firm specializing in the areas of weight management, stress management, tobacco cessation, and cardiovascular health.
• Harcourt Assessment, Inc. , a leading test publisher, announced today that it has acquired Edformation, Inc., a privately held company offering its AIMSweb product to education customers. AIMSweb is a research-based screening and progress monitoring tool for use by special education teachers, curriculum specialists and school psychologists as part of a Response to Intervention (RtI) solution.
• Kenexa Corporation will buy BrassRing for approximately $155 million to expand its recruitment software and services offerings. Kenexa, formerly TalentPoint, reportedly has more than 2,000 customers. BrassRing's recruiting solutions are used by companies in the aerospace, financial services, health care, and medical technology industries. Associated Press, October 6, 2006.
• Mercer Human Resource Consulting has acquired HRPartnering Pty Ltd (HRP), a specialist talent management business in Australia. Based in Melbourne, HRP has 15 human resource and software professionals.
• Ultimate Software (ULTI), a leading provider of end-to-end strategic human resources, payroll, and talent management solutions, announced today its acquisition of R.T.I.X. Limited, a United Kingdom company, and its wholly owned subsidiary R.T.I.X. Americas, Inc. (RTIX) The acquisition of RTIX expands the performance management and competency-based talent management feature-sets that Ultimate Software can provide midsized and large businesses in the United States and globally.

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The New Messaging: Take It Straight to the Buyer.

PR Squared had an excellent blog posting yesterday entitled Bloggers Pick the Most Notable [PR] Developments for 2006.

The posting references a poll that Dan Greenfield, VP at Earthlink, organized asking various PR bloggers for their take on The Most Important Developments of 2006.

Some of the popular choices in the poll included:

PR 2.0
Social Media Press Releases
Social Media Club
GM's Response to NY Times Columnist Thomas Friedman
YouTube
Viral Videos (Diet Coke and Mentos)
User Generated Content
Customer Engagement

Todd Defren, author of PR Squared, astutely points out how all of this relates to TIME Magazine's declaration that the person of the year in 2006 is "you". As TIME Magazine stated, "You control the media now, and the world will never be the same."

Mr. Defren also had an interesting comment on how 2006 proved that the Social Media Press Releases is quickly replacing the traditional press release: "We are going to reformat a 100-year old document for an emerging era in which consumers wield unprecedented control. By re-architecting the news release, we will place the power to disseminate data and effect reputation directly into the hands of the consumer…”

Oh, how true it is. This is a similar message that HRmarketer.com has been preaching in the HR industry for four years. While we still come across the occasional "the world is flat" marketing or PR dinosaur that "doesn't get it," they are converting fast and we get fewer people looking at us as if we have three eyes.

What all of these "Marketing PR", Web 2.0 and PR 2.0 tactics like social media press releases, blogging, SEO, etc, have in common is that they support the FACT that the traditional media/journalists and anyone else who gets in between the seller and the buyer are becoming less and less significant. The reason is that sellers can now easily and cost-effectively take their message direct to the "buyer.” Suppliers no longer need to rely on a journalist or analysts to place their message in front of the buyer, as Elrond Lawrence points out in his article The Rise of Marketing.

This is and will continue to have a dramatic impact on how HR suppliers spend their marketing and PR dollars. HRmarketer.com just completed a research report that covers the latest trends and best practices for marketing to the human resource and employee benefits marketplace going into 2007. Some of the key findings are the continuing devaluation of print advertisements, printed direct marketing and traditional press reeases. Visit HRmarketer.com in mid-January to get the free report or download lots of other comprehensive marketing reports today on this subject matter.

Changes Coming at Ceridian?

Ackman's Pershing Square, the hedge-fund firm run by William Ackman, bought an 11.3 percent stake (15.7 million shares) in Ceridian, pushing the company's shares to their biggest gain in 20 months - $28.22 as of Dec 20, 2006. Pershing Square won't seek to change or influence control of the company, according to a filing today with the U.S. Securities and Exchange Commission. Pershing Squire is now Ceridian's second-largest shareholder after Janus Capital Group (Denver-based mutual-fund company).

According to Bloomberg: ".....Pershing usually invests in as many as a dozen companies in a year and presses for changes at one or two of them. Pershing wants McDonald's Corp., the world's biggest restaurant chain, to spend less on its outlets and more on dividends and share buybacks. It wants Borders Group Inc. to sell or abandon the company's Waldenbooks mall-based stores. Hedge funds are largely unregistered pools of capital that cater to wealthy individuals and institutions and allow managers to participate substantially in profits from investments....".

According to SEC Investor: "..Perishing Square has only filed a 13G indicating that this is only a passive investment. However, activist hedge funds occasionally use this filing type to acquire shares quietly before taking a more active stance, since it does not require a "Purpose of Transaction". If and when Pershing Square takes a more active stance in the company, it will be forced to file a 13D with the SEC which will outline its investment objectives. Given Bill Ackman's background, this is a distinct possibility, and definitely a stock worth watching..".

This is a good news bad news situation for Ceridian. The good news is that we believe Pershing Square views Ceridian as an undervalued company. And we would agree. The bad news is that if Pershing Square has its way, some painful changes may be coming at Ceridian - more than just executive changes. But it may be a blessing in disguise for Ceridian and their stakeholders.

Top 25 Marketing Blogs

One of the things I really love about the internet and the Web is that there is a wealth of information available on a wide range of topics (an overwhelming wealth). I personally read at least 30 blogs on a fairly regular basis. They cover marketing, technology, search engine optimization, politics, society and culture, and a few other areas not easily labeled (read - they cover a bunch of stuff). While poking around the other day on Barbara Coll's website - who, by the way, was a panelist at WebGuild's recent Advanced Search Marketing conference and offered great advice on SEO and PPC (pay per click, or paid search marketing), a podcast should be up on the WebGuild site soon - I ran across a link to another site, Firewhite, which has a list of the top 25 marketing blogs. Now, these are not just the writers' favorites, but the top 25 by traffic, according to Alexa rankings. Check them out if you get a chance, I'm certain you'll find a few useful things to help in your daily marketing activities. And let us know your favorite online information resources, I'm certain there are many I'm not aware of that I would like to be.

Are you collaborating?

The Human Capital Institute recently held a webinar titled "Collaborative Learning Technologies: Wiki's and Blogs and More, Oh My!" where they discussed how new web technologies are transforming the learning process and environment. Grant Ricketts and Ben Willis from Saba presented good information about how companies can take advantage of these new Web 2.0 technologies to train their workforce. As has been our theme lately, these technologies can, and should, be adapted for use in marketing as well. Of particular concern is blogging, but possibilities exist for utilizing wiki's and other user generated content to help branding and communicating with potential customers.

A few tidbits of information from the presentation jumped out, though. The first asserts that the US workforce has reached a "tech tipping point" where more than 50% of workers have grown up with technology and are savvy about its use. The other tidbit relates to what they termed "fingertip knowledge" and says that people don't want to wait for information, rather, they expect to find it immediately, and are looking to online resources first to find what they are looking for. These have huge implications for the future, and deploying strategies to take advantage of these trends now will better position your organization’s products and services with this tech savvy group down the road.

Web 2.0 technologies are often referred to as "user generated" or "collaborative" technologies. What Ricketts and Willis promoted for the learning environment, as mentioned earlier, is quite applicable to marketing HR solutions in the B2B market as well – particularly when it comes to blogging, and especially if your company has a recognized thought leader within your market space. How is this collaborative, you ask? Well, it's getting more than the marketing department involved in creating your message. Blogging also allows readers to comment on and offer their view on topics and issues addressed by the blogger (as long as you have the comments option on, and monitor them regularly). Another benefit to blogging lies in the additional branding this creates, as well as increased online exposure which often translates well in search engine rankings of which much has been discussed in this space recently. If your company does not currently have a blog, you should seriously consider getting one up and running as soon as possible.

Another collaborative technology gaining traction is the use of wiki's. According to Wikipedia a wiki is:

"...a type of Web site that allows the visitors themselves to easily add, remove, and otherwise edit and change some available content, sometimes without the need for registration. This ease of interaction and operation makes a wiki an effective tool for collaborative authoring."

While not widely used in the B2B marketing arena, we believe the time will soon be upon us where this technology will allow for a richer, more personal way to communicate with customers and develop prospects. Motorola has started their own wiki for their "Q" line of products (similar to Blackberries or Treo's) whereby users contribute to the wiki and increase the available knowledge about product use or help fix bugs. While many may not recognize this as marketing, at least not yet, the potential impact is great. Engaging users on this level can create a sense of ownership, and potential customers, especially the tech-savvy group, respond to the interactive nature of this method which can subtly push them towards the product.

Technology is moving quickly, and astute marketers are deploying these new methods and technologies to their advantage (think SEO and Marketing PR). Collaborative technologies offer great potential to marketers, and while not all may be suitable for your organization, some are and if you don't consider them in the near future, be assured your competition will.

HRmarketer.com Needs Your Input for it's Latest Marketing Trends Report

HRmarketer is asking HR and employee benefit marketing and PR professionals to join the respondents of this final “Marketing Trends Survey” quarterly study in 2006. The final report will focus on the online marketing trends in the HR marketplace – from blogging and Podcasting to pay-per-click advertising.

The previous three reports of 2006 covered topics ranging from search engine optimization (SEO) to increasing Internet use in marketing and PR. To participate in the final report (and reserve your FREE copy) please take the survey.

The feedback from the HR vendor community on our previous Marketing Trends Survey reports (available for free at the link above) has been really positive. For many marketing professionals seeking to re-energize and re-focus their corporate marketing efforts, these reports provide welcome and credible validation in support their marketing plans, and have actually helped define and prioritize marketing budgets and expenditures. These reports helped solidify the marketing approach for many vendors.

The first report of the year touched on basic trends that have now become standard. It was discovered that the most important objective for most HR/Benefits marketers’ are lead and demand generation. It was also found that online marketing activities are becoming more common and even replacing traditional marketing activities like participating in trade shows.

The second report focused on Marketing 2.0 and PR 2.0 tactics; it was apparent that the two are becoming increasingly relevant to B2B marketers. Another growing trend is PR’s transition from an independent entity to an integrated component of marketing. It is evident that online lead generation is underway with most HR suppliers.

In the most recent report, HRmarketer explored trends displayed by HR buyers. Primary among these is the increasing reliance on informal networks—most buyers go to trusted sources, such as professional peers, for purchasing decisions. This complete report also delves into the growing importance that buyers place on a vendor’s online visibility. Print material is no longer paramount, unless it is a product review or a white paper.