416 SALES DOWN AGAIN AT GETTY
July 10, 2001
Getty Images, Inc. announced today that their sales for the quarter ending June 30, 2001 are
expected to be about $115 million down from the $124 million in Q1. They had announced on
April 25th that they expected sales for Q2 to be between $120 million and $130 million.
This pre-announcement of earnings was triggered by SEC rules that require a company to inform
investors when they expect to miss previously announced estimates. The full results for the
quarter will be announced on July 25, 2001. Getty also pre-announced in April
(See story 392 ).
In his conference call with investment analysts, Jonathan Klein, CEO of Getty Images, said the
results were, "a disappointment to us and very unexpected." He attributed the falloff to a
"massive turn in the last half of June, a period that has been traditionally strong."
There was continued weakness in the U.S. market and this was exacerbated by a sharp
deterioration in the European market as well.
SG Cowen Securities, Inc. cut their revenue estimate for Getty for fiscal year 2001 to $468
million which is 3.4% lower than 2000's $484.8 million. Earlier Cowen's estimate for 2001 had
been $504 million.
It's been over a year since Getty made it's last major acquisition and their quarterly sales
2nd QT 2000
3rd QT 2000
4th QT 2000
1st QT 2001
2nd QT 2001
Klein was asked by analysts why the falloff was so sudden. He admitted that at this point he
had no answer, but expects to have a better explanation on July 25th, they have had an
opportunity to closely examine their data. He offered the following insights based on their
Sales through May were on target for meeting their estimates. At the end of June, a time when
customers are traditionally trying to spend their quarterly budget, call volumes went down,
searches on their web site went down and the requests for analog sales also fell off.
Based on reports from some other U.S. sellers this seems to have been a general trend for June
with several admitting to lower sales for the month compared with the previous months.
Based on reports from his sales staff Klein said customers have become more price conscious,
have to get more approvals, and are cancelling projects at a more frequent rate. The customers
pick less expensive licensing options and license fewer exclusives than had been the case
previously. Customer are also using fewer Rights Protected images and laying off some of their
Some in the industry have predicted that in a slow down there would be an increase in Royalty
Free sales as customers stopped using the more expensive RP images. It is not clear whether
this is happening at Getty. Other companies report that their Rights Protected business is
surviving the slowdown in sales better than RF. One thing that may be happening is that
customers who can no longer afford RP images are not moving to "buy" new RF images, but rather
are going back to those discs they purchased a year or two ago and making more use of the
images they already own.
Klein said that the "customers are in a recessionary condition."
In an effort to reduce costs Getty intends to cut their staff worldwide from 2,300 at the end
of Q2, to 2,000. Getty had about 2,800 employees a year ago and has been steadily reducing
staff since that time.
Another thing that may be affecting Getty's sales is the combining of three large similar
collections -- Stone, TIB and FPG. This may be resulting in lower sales overall for these
brands. Previously, when these brands were competing head-to-head, they may have been
providing the clients with a larger selection and more choice and thus making more sales. Now,
to get that extra choice, after reviewing the Getty selection, the clients may be going
There is some indication that Getty's major competitors are seeing
less of a falloff than is the case at Getty.
From a cost point of view, Getty has needed to limit the selection and variety on the images
they offer. The question, which will only be answered over time, is will buyers accept one of
the choices Getty offers, or will they continue their shopping for the image they really want
by going somewhere else.