Keane: Lots of Trouble, And Results Show It

Keane (NYSE: KEA), the IT consulting firm, reported a 3.2% decline in revenues to $232 million for the third quarter. During this time, earnings fell by 5% to $8.4 million, or $0.13 per share.

Well, the company has suffered from much drama lately. In May, the company’s CEO, Brian Keane, departed. There were allegations of sexual harassment.

Then the company’s president, Richard Garnick, had to leave. The allegation: lack of compliance with travel expenses, as well as “unauthorized communications.”

What’s going on here?

Such turmoil is never good. Besides, Keane must contend with huge competitors, such as EDS (NYSE: EDS), IBM (NYSE: IBM), Accenture (NYSE: ACN), Wipro (NYSE: WIT), Infosys (Nasdaq: INFY), and so on.

A big problem is that while its competitors are investing heavily in India, Keane is still woefully behind. In fact, Garnick was supposed to be the leader to help with initiative. After all, from 2001 to 2005, he was at Wipro, a fast-growing IT firm based in India.

Also, Keane’s lagging stock price will be a drag. That is, IT firms rely heavily on M&A for growth. Now, Keane does not have a stock-currency to do deals.

Despite the issues, Keane is still getting marquee contracts. For example, it snagged the deal to build the next-generation EDGAR system for the SEC.

But Keane now has a lot of distractions to deal with – as its competitors continue to scale. In other words, the company will likely be in fix-it mode for the next year or more – with the stock continuing to languish.