Daily Research News Online no. 4051 - Harris Loses Knapp, Reports Mixed Results

Harris Loses Knapp, Reports Mixed Results

May 6 2005

Harris Interactive Chairman and CEO Robert E. Knapp has announced his surprise resignation from the company, by mutual agreement with its Board of Directors. The Board has appointed President and COO Gregory T. Novak as Acting CEO and George Bell as Chairman. The company also announced results for Q3 2005, showing a steep rise in revenue but a net loss of $2.7m.

Novak, 43, who has served as President since April 2004 and was recently profiled by DRNO, says he is 'honored and excited' to be given the role and that his mission is 'very clearly defined... to lead this organization back to proper levels of growth and profitability'. Novak worked previously for GSX, General Electric and FMC Corporation.

Knapp replaced the firm's founder, Gordon S. Black, as CEO at the end of January 2004. He added the title of Chairman when Black resigned in January this year.

Bell, 48 and an independent Director of the company since last year, is a special venture partner of General Catalyst Partners and a former CEO of Upromise and Excite@Home. Bell says the Board is 'not initiating a search for another CEO at the present time, and is looking to Greg Novak to lead the management team, accelerate the Company's growth rate, and improve financial performance'.

The resignation was discussed today in a webcast to coincide with the company's Fiscal Third Quarter Results. Among the highlights, revenue from continuing operations was up 52% to $50.9m, including US revenue of $39.1m (up 45%) and European revenue of $11.8m (up 83%). Revenue for the Harris Interactive Service Bureau (HISB) was down 30% to $1.7m. Global Internet revenue reached $28.9m, now 57% of total revenue and including US revenue of $25.8m and European $3.1m.

The company reported a 52% decline in operating income from continuing operations versus the same period last year, including one-time items, and a pre-tax restructuring charge of $1.1m due to staff reductions and other actions. Net loss of $2.7m included a $3.3m loss, mostly non-cash, for discontinued operations in Japan - the company having announced (on March 30th 2005) its intention to sell these. The loss compares with net income of $1.6m for the third fiscal quarter of 2004.

A previous estimate for revenue from continuing operations for the full fiscal year has been revised downwards, from $205-$210m to $193-196m - the earlier figure had included approximately $6 million of revenue from the now discontinued Japanese operations.

The Board changes are effective immediately. Harris Interactive is online at www.harrisinteractive.com where a fuller financial report can be found.