News
Klein outlines plan for growth after disappointing 3rd quarter; Getty’s stock hits new low
During Getty’s analyst conference call CEO Jonathan Klein stated without hesitation that the results for the 3rd Quarter of 2006 and the for the year thus far have been “extremely disappointing.” He then outlined a plan for growth that takes into account a decrease in the company’s guidance revenue figures for Q4 and a decrease in revenue estimates for all of 2007. As of this writing, Wall Street has taken little comfort from the plan and Getty’s stock price hit a new 52-week low of $41.25.
Getty posted $198.1MM in sales for the 3rd quarter, well short of the $205MM to $210MM the company had projected. Removing the effect of stock-based compensation of $4.2MM, Getty’s margins remained relatively stable year over year for the quarter. For the first nine months, however, the company’s net profit margin dropped from 20% ($107.2MM) for the first three quarters of 2005 to 16% ($99.3MM) in the 2006 period.
Klein attributed the decelerated sales growth to the availability of more image licensing models than ever before, the fact that the business of Getty’s main customers, advertising and marketing companies, is in transition due to the advent of the digital economy, the existence of new and varied ways to advertise and communicate and finally, increased competition. He characterized four factors causing the current transition of the market for stock photography:
1) Broadband is driving the growth of new communications platforms fast;
2) Change in the advertising, publishing and media industries is accelerating at an ever faster pace;
3) Imagery will replace the written word as the primary form of communication world-wide; and
4) We live in a marketing driven economy.
Klein’s described his plan for the future, which takes these factors into account, as a reallocation of resources and investment in areas with high potential during the coming period of slow growth.
Klein listed the main components of his “Plan for Growth” as:
* A soon-to-be-launched new version of the company’s web-site.
* Changes to the sales force involving assigning sales reps to every client included in the top 80% of the company’s revenue; putting more “feet on the street” to visit clients face-to-face and reducing the inside sales force; redoubling the collaboration between Getty’s sales and creative departments; and applying a new approach to gaining more share from the most important customers (for this last one, Klein would not reveal exactly how.)
* Align marketing more closely with customer segments.
* Use more paid search;
* More and better product enhancement and product development. Klein says Rights Ready has exceeded expectations and the company plans to introduce more alternative licensing models next year. He also mentioned plans to continue to build up the iStockphoto business, the micro-stock company Getty acquired earlier this year that has done exceptionally well with customers downloading over 2.5MM images in the 3rd quarter alone and being on track to exceed 10MM downloads for the entire year.
* A major push into international, especially non-English speaking territories; and
* Increasing content and sources of content. In this area, Klein stressed the company’s plan to aggressively build its footage assets by moving to an entirely digital work-flow, building more content internally and through partner suppliers, and educating the market about its use.
* Monetize web-traffic beyond pure image licensing.
Click here to view the original press release.
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Related stories:
Rumors of staff lay-offs at Getty Images (October 20, 2006)
Licensing Logic – Getty’s thinking on Rights Ready pricing (September 1, 2006)
Getty releases 2nd quarter 2006 financials (July 26, 2006)
The three giants: stock photography consolidation (June 6, 2006)
Getty Posts Improved Sales, Flat EBITDA for 1Q '06, Stock Declines (April 24, 2006)
Getty acquires iStockphoto for $50 million (February 9, 2006)
Getty releases Q4 2005 numbers (January 27, 2006)
Getty reports revenue growth of more than 20% for Q3 2005 (October 21, 2005)
Posted in: News, Stock Photo Companies
Comments(1)
post a comment »Pino Granata, October 31, 2006 [#]
The impossible growth.
In a market where we witness every day a decrease in prices I think it will be impossible to grow. We have spoilt our clients and they know very well that they can buy cheaper and cheaper. To me Klein is like The apprentice sourcier. He started all this and now he can’t stop the trend anymore.Of course Getty and Corbis can increase their turn over buying other agencies, but this is not a significant growth. Unless we change this dangerous policy to decrease prices, the market is bound to shrink.