Digitas Restructuring Charge Leads to Q3 Loss

BOSTON- Digitas today reported a net loss of $44.5 million for the third quarter on revenue of approximately $85.5 million.

That figure is an improvement over the third quarter of 2001, when revenues were $72 million. Overall revenue for the year so far is slightly less than $230 million, down from about $270 million for the same period in 2001.

The loss, which had been expected, was attributed by company officials mainly to a $47 million restructuring charge related to real-estate holdings in Boston, New York and San Francisco. According to a prepared statement, “approximately $9.4 million of this charge relates to the write-off of leasehold improvements and other fixed assets and will not result in the use of cash. The remaining $37.7 million of this charge will be paid out over the next three to nine years in accordance with the terms of the remaining leases.”

Though Digitas lost nearly $46 million in the third quarter a year ago, the latest results were disappointing in that the company had of late posted modest gains, notching profits of $711,000 and $1.8 million in the first and second quarters of 2002, respectively.

Digitas earlier this month added a direct-marketing assignment from OnStar, a subsidiary of General Motors, which hired the agency to bolster loyalty among the service’s 2 million current subscribers [Adweek, Oct. 14].

Digitas shares [DTAS] closed Wednesday at $2.61, down 12 cents or 4.4 percent. Its 52-week high is $6.10 and 52-week low is $1.76.