Salomon Downgrades Exult to 'Outperform'

Analyst Patrick Burton says the human resource company's clients are spending less on items like testing, education, staffing and consulting

Salomon Smith Barney downgraded Exult (EXLT ) to outperform from buy.

Analyst Patrick Burton tells salesforce revenue weakness apparently is due to weak spending by clients on discretionary items like testing, education, staffing and consulting.

Burton expects weakness in discretionary spending and a lack of major new signings, to cause the revenue growth rate to slide considerably relative to expectations. Burton cut the $434 million 2002 revenue estimate to $403 million; he also pushed the third quarter 2002 breakeven forecast to the fourth quarter of 2002.

Furthermore, Burton cut the $0.01 2002 earnings per share estimate to a $0.13 loss, and cut the $0.29 2003 earnings per share estimate estimate to $0.12 earnings per share. Finally, he cut the $12 target to $6.

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