Hurt by deteriorating sales in the face of new anti-spam legislation, Equifax (Atlanta) last month consolidated its eMarketing Services business unit. The company in December completed a write-down of capitalized assets, consolidation expenses and an estimated operating loss from the unit totaling 15 cents per share. The eMarketing unit will be folded into Equifax' Marketing Services Division.
The value of the eMarketing Division, which once hovered at around $27.4 million, has been cut to $7.5 million. An undisclosed number of offices have been closed as a result of the consolidation.
The write-downs are expected to reduce Equifax' fourth quarter earnings by about $23 million, or 17 cents a share.
Analysts had projected the company to earn 40 cents a share in the quarter. The write-downs included $1.1 million in costs incurred from the severance of the estimated 50 employees that were laid off from the company's Boca Raton, Fla., office last summer (EIR, Sept. 1, 2003).
eMarketing Services, which provides email marketing services, seemed to be on the up-and-up in mid-2002 when Equifax expanded its marketing business with the acquisition of Naviant, a deal that gave Equifax access to more than 100 million names of permission-based email recipients. But news of imminent anti-spamming laws last year caused clients to cancel their agreements with Equifax.
"The deterioration of the market for permission-based e-marketing products, including the recent impact of regulatory uncertainties, has led to this decision," said Donald Heroman, chief financial officer. The cost reductions should enable the business unit to break even in 2004.
Heroman said the business has been hurt significantly by anti-spam legislation. A new anti-spam law took effect in California on Jan. 1, and President Bush last month signed the CAN-Spam Act, which places tight regulations on unsolicited emails nationally.
Meanwhile, Equifax has announced the return of John Healy as its Marketing Services Division group executive. Healy returns to Equifax after a two-year stint at DoubleClick. He replaces Mark Miller, who oversaw the operation in his role as president and chief operating officer until his dismissal in November (EIR, Nov. 24, 2003).
Equifax: 404-885-8000 or www.equifax.com
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