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Korn/Ferry International (NYSE:KFY) reported better-than-expected fiscal second quarter results primarily due to a strict control over operating expenses. The company posted earnings of 9 cents per share, excluding restructuring charges, compared to the Zacks Consensus Estimate for a penny loss. On a GAAP basis, net income came in at $2.7 million, or 6 cents per share, compared to GAAP net income of $13.6 million, or 30 cents in the year-ago period.

Korn/Ferry is a provider of executive recruitment, leadership and talent consulting and talent acquisition solutions, with presence the Americas, Asia Pacific, Europe, the Middle East and Africa. The company offers its services through a worldwide network of over 78 offices in 40 countries. Korn/Ferry served 4,238 clients during fiscal 2009, which included approximately 45% of Fortune 500 companies. In June 2009 the company completed the acquisition of Whitehead Mann, an international talent management firm.

The Los Angeles-based company’s total revenues slipped 26.6% year over year to $146.6 million, mainly due to a 26.0% reduction in fee revenue to $140.1 million. The decline in fee revenues was the result of a nearly 14% decrease in the number of engagements billed due to the continuing impact of sluggish global economic conditions.

Compensation and benefits expense reduced 21.3% year over year to $102.1 million primarily due to a decrease in global headcount and variable compensation. General and administrative expenses declined 16.0% to $27.2 million on management’s stringent efforts to control costs. Korn/Ferry also recorded a restructuring charge of $2.8 million during the quarter as a result of reorganization in Europe, Middle East and Africa (EMEA) region’s operating structure. However, the top-line weakness more than offset the decline in operating expenses. Consequently, Korn/Ferry posted an 89.7% decrease in operating income to $2.2 million, from $21.5 million in the year-ago quarter.

In October, rival Heidrick & Struggles International Inc. (NASDAQ:HSII) reported third-quarter earnings of 25 cents per share, beating the Zacks Consensus Estimate by 19 cents as the company aggressively reduced headcount and bonuses. The company continued to witness sluggish net revenue, which slipped 34.6% year over year to $103.5 million as performance was adversely affected across the Americas, Europe and Asia Pacific regions.

Looking ahead, Korn/Ferry expects fee revenue to range between $130 million and $145 million during fiscal third quarter on constant currency basis, while earnings per share is expected between 5 cents and 15 cents. The guidance is higher than the Zacks Consensus Estimate of 3 cents per share derived from 7 covering analysts.

Meanwhile, the Zacks Consensus Estimate on the company’s earnings for the fiscal year ending April 2010 is currently pegged at 3 cents per share, which moved up by 2 cents over the past month as 1 of 7 covering analysts raised projections.

Source: Korn / Ferry’s Second Quarter Better than Expected