Sales Flat At Getty

Posted on 5/2/2001 by Jim Pickerell | Printable Version | Comments (0)



May 2, 2001

On April 25th Getty Images, Inc. announced sales of $125.8 million for the first quarter of 2001
that ended March 31st. This was about four percent below the $130 to $133 million guidance
provided by the company on February 8th, and less than a million above the 4th quarter 2000

revenue of $124.9 million.

In a pre-announcement earlier in April 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 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."

Conference Call

Klein 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 over
6% of total sales quarter-to-quarter.

Klein said, "We remain cautious about our expectations for 2001, and have developed targeted
strategies to maximize our bottom-line objectives. However, we are also focused on the future
and believe we are well positioned to manage through this challenging economic environment and
to capitalize on the tremendous opportunities that lie ahead. We are most fortunate in that we
have a large customer base, the leading market position, strong operating cash flow and a solid
business model."

In light of the 1st Quarter results and anticipated 2nd Quarter results, Getty has lowered it
expectation for sales in 2001 to between $510 and $540 million. This is down from the February
8th estimate of $550 to $565 million.

In the conference call with investment analysts Klein told them that sales in the January
through April period was worse than September through December 2000. He said sales in January
were good, but February was "miserable" and call volumes seemed to stall in March and April.

He pointed out that in times of economic slowdown advertising is the first thing corporations
cut because brand building is the most expensive and least effective form of marketing. However,
advertising also tends to be the first thing to recover once there is a turn around in the

Klein was asked how the implementation of the new photographer contracts was going and he
replied that the response to date has been "extremely positive" and that they have received back
a higher percentage of contracts than expected. He indicated that they do not anticipate any
problems in signing the "vast majority of photographers we wish to work with going forward."

Forward Guidance

For the second quarter of 2001, the company expects to report revenue of $120 million to $130
million. Merchant banking firm Thomas Weisel Partners estimates $122.4 million. 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, and
because they have bought some TIB offices that were formerly sub-agencies) zero growth would be
about $505 million for 2001.

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

2nd Quarter 2000   


3rd Quarter 2000   


4th Quarter 2000   


1st Quarter 2001   


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

EBITDA margins are projected at approximately 24% to 26%.

    ["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 market."

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 301-461-7627, 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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