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StaffMark mulls units sale
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April 27, 2000: 5:23 p.m. ET
Staffing firm considers making its e-solutions business its core operation
By Staff Writer Kim Khan
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NEW YORK (CNNfn) - StaffMark Inc. announced Thursday that it hopes to release details of company restructuring in two weeks, including a possible sale of operations and making its e-solutions business, Edgewater, its core operating company.
The Fayetteville, Ark.-based staffing company hired Credit Suisse First Boston to review strategic options, citing weak demand for information-technology staff, its disappointing stock performance, and investor preference for e-solutions companies over traditional staffing firms.
StaffMark's chaiman and CEO, Clete Brewer, said "We are considering strategic alternatives for each of the other businesses, including possible divestitures, that could potentially result in our retention of Edgewater as the primary operating unit of our public company."
"We're taking these steps to boost the share price and to unlock the value of the Edgewater business for our shareholders," Brewer told CNNfn.com.
"I don't see them spinning off Edgewater," said Matthew Roswell, analyst with Legg Mason. "More likely you'll see a shrinking down to Edgewater ... keeping existing IT operations that support Edgewater."
 Roswell said the information-technology division was made up of several different pieces acquired by StaffMark and was never fully integrated.
Edgewater significantly outperformed the company as a whole in its first quarter, with revenues rising 47 percent compared with the company's overall revenue increase of 5 percent. Because of a project backlog, revenues are expected to continue to rise.
StaffMark's (STAF: Research, Estimates) first move is to take its London-based Robert Walters staffing business public. Robert Walters, which was a public company before StaffMark purchased it in 1998, will list on the London Stock Exchange in the third quarter.
"Taking Robert Walters public is the first step in our restructuring process," Brewer told CNNfn.com. "Robert Walters will really benefit from being a London listed company."
StaffMark will use the money raised by the IPO to repay bank debt, but it did not say how much cash it expects to raise. According to Roswell the company will be looking to raise about $250 million, which will erase nearly all of its current $288 million.
Roswell said the London market puts a greater value on staffing companies compared with American investors, who tend to view e-solutions and technology as a much sexier sector.
StaffMark also announced its first-quarter earnings Thursday, which fell below analysts' expectations.
The company earned $1.9 million, or 7 cents per share, compared with $6.4 million, or 22 cents per share, for the year-ago quarter. Revenues for the quarter were $294 million, compared with $280 million for the first quarter of 1999.
According to earnings research firm First Call, analysts expected the company to earn 11 cents per share. 
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