Sales Down At Getty

Posted on 4/10/2001 by Jim Pickerell | Printable Version | Comments (0)



April 10, 2001

Getty Images, Inc. announced today that they expect revenue for the first quarter ended March 31,
2001, to be approximately
$124 million, which is about five percent below the $130 to $133 million guidance provided by the
company on February 8th

This per-announcement of earnings is required by the SEC when a company anticipates they will not
reach previously announced numbers.

Revenue for the 4th quarter 2000 was $124.9 million and Getty had predicted that sales would be
$133 million. The 4th quarter was the first time in the history of the company that sales were
below estimates. The 1st quarter 2001 will be the second straight quarter where sales have been
below estimates.

Jonathan Klein, CEO of Getty Images blamed, "The slowdown in the U.S. economy, and particularly in
marketing and advertising spending..." for the poor results. He also indicated in the conference
call that the slowdown had been primarily in the United States. So far Getty has not experienced
a falloff of sales in Europe." Since 59% of Getty's 2000 sales were in the U.S. that would
indicate that the U.S. drop in sales might have been as high as 6.7% of total sales

In addition, if this drop was not evident on February 8th when Getty provided its last guidance to
investors, there has been a precipitous drop in sales in only two months.

Business Outlook

While the company said it intends to continue its practice of not updating forward-looking
statements until the next quarterly results announcement, as of April 10, 2001 the company
anticipates that 2001 revenue will be in the range of $510 million to $540 million. This was down
from the February 8th estimate of $550 to $565 million.

For the second quarter of 2001, the company expects to report revenue of $120 million to $130
million, and merchant banking firm Thomas Weisel Partners is estimating it at $122.4 million --
lower than the sales of the current quarter. If Getty's sales for 2001 turn out to be in the range
of $510 million it would be basically zero growth for the entire year. On a pro-forma basis
(because Getty didn't own VCG for the whole of 2000) zero growth would be about $505 million for
2001, and Getty will have additional revenue from some small acquisitions they made in the 4th
quarter 2000.

It is worth noting what sales have been for the last four quarters since Getty stopped acquiring
major companies. The were:

2nd QT 2000   

3rd QT 2000   

4th QT 2000   

1ST QT 2001   

$123.6 million   

$127 million   

$129.4 million   

$124 million   

This is not a picture of dynamic growth and the industry undoubtedly has a difficult year ahead of
until the economy turns around.

Klein said, "During the first quarter, our customers, primarily in the U.S., began to experience
delays and cancellations in advertising and marketing expenditures, resulting in lower than
expected sales. In addition, our customers have expressed limited visibility regarding their
outlook for the remainder of the year. Therefore, we are lowering our financial guidance for 2001.
We will also continue our rigorous efforts to reduce costs and increase efficiencies within our
organization while maintaining our high level of customer service and support."

EBITDA margins are projected at approximately 22%. The original estimate was 23%. "Getty has
typically been able to manage expenses to beat the bottom line, but this shortfall in revenue was
too much to make up," according to Keith Gay of Thomas Weisel Partners. Photographers and staff
can expect Getty to be very aggressive at cutting costs in the next few months as they attempt to
raise EBITDA margins because this number is critical to their future approval by the investment

    ["EBITDA" is defined as earnings before income taxes, depreciation, amortization, interest,
    exchange gains and losses and, when applicable, loss on impairment, debt conversion expense,
    integration and restructuring costs, extraordinary items and other income and expenses. EBITDA
    should not be considered as an alternative to operating income, as defined by generally
    accepted accounting principles, as an indicator of our operating performance, or to cash flows as
    a measure of our liquidity.]

Klein continued, "We remain confident in our strategy and in the power of our business model. With
a large customer base, a strong market position, significant revenues, attractive margins, strong
operating cash flow and a solid cash position, we have the resources to manage through this
challenging economic
environment successfully and to continue to expand our global leadership in the visual content

Getty Images will announce full first quarter financial results on
Wednesday, April 25. At that time, the company will provide updated guidance for the remainder of
the year.

Copyright © 2001 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


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