By Steven Schnoll November 5, 2004 -- Bowne & Co, Inc. (NYSE: BNE) The company reported a third quarter net loss of $6.6 million or $0.18 per diluted share compared to a net loss of $5.8 million or a loss of $0.17 per share earnings in the same period in 2003. Q3 revenues were down 1.5% to $194.1 million from $197 million in the same 2003 quarter. Bowne announced a new permanent CEO on Wednesday October 27, former interim Philip Kucera. The next day after his appointment Kucera had the challenging task of presiding over a poor quarterly results call. While much of the blame for the performance was placed squarely on the lack of IPO’s, the numbers still were hard to understand. Topics of this summary: Company Performance Overview Guidance Raine’s Radar Q & A Company Performance Earlier in the month Bowne announced the sale of their document outsourcing business to Williams Lea. The financials reported include the Bowne Business Solutions group as a dilutive discontinued operation. The sale for $180 million, should net Bowne between $50-$55 million in cash. Excluding the sale costs and several restructuring charges reported for the quarter the pro forma loss for Q2 is $0.09 per share compared to earnings of $0.05 per share in Q3 2003. Year to date the earnings per share was $0.45 as compared to the 2003 first nine months of $0.21 per share. The disappointing performance was attributed to two primary reasons. One, the Bowne Global Solutions was negatively impacted by weak technology spending and two the Financial Print segment experienced weak volume after two strong quarters. Bowne Financial Print reported Q3 revenue of $130 million; a 4% decrease. This was reported to be mostly from a precipitous 19% drop in transactional printing. This decrease was partially offset by an increase in mutual fund corporate compliance reporting. Profit for this group declined $7.8 million. For the nine months financial print reported revenue of $494 million up $36 million or 7.9% with transactional print up $24 million or 13.7%. The Global Solutions group reported Q2 revenue of $55.8 million, $4.0 million higher than 2003. Segment profit was flat at $2.7 million. Year to date revenue of $167.9 is $3.0 million higher than 2003. Profit for the group declined by $1.1 million to $8.1 million. The group is taking aggressive action to reduce costs and reduce its reliance on the IT sector for revenue. Guidance Bowne is revising its full year guidance expectations due in part to the sale of the BBS group. It now lowers full year pro forma earnings to be $0.35 to $0.46 per share. Full year revenue is anticipated to fall between $875 to $910 million. Raine’s Radar Bowne’s dependence on the winds of Wall Street was again clearly evident this quarter. This global financial print leader delivered questionable results and got a pounding from analysts. The new CEO seemed unprepared even though he was in the interim position. The highly defensive call clearly illustrated many flaws in the company direction or lack thereof. One sticking point was how the company was going to use the roughly $50 million in cash from the sale of Bowne Business Solutions group. Not sure what the reason was to sell this unit according to Q2 report this unit was the shining star with an impressive contribution to the bottom line. With the fickle fortunes of Wall Street still uncertain investors want to see support for the declining stock. Could Bowne, the countries financial print leader, be a potential takeover candidate? Analysts seem to be giving new CEO Kucera a very short leash. Q & A The results for Q3 2002 and Q3 2004 were similar so where are the efficiencies previously touted? The answer was described as purely a different mix of business. Potential market volume is still there just unsure when it will materialize Can’t provide any market guidance for Q4 Transactional business is still very strong and should not be analyzed by quarters since many projects are cyclical Several questions attempted to seek some answers on why the company missed their numbers but the answers were very fuzzy and difficult to understand. Cash from BBS sale will for the short term will be invested in US Treasuries until the highest and best use of the cash can be determined The company will eliminate some management positions to reduce costs. Money from sale of BBS most likely will not be used to pay down debt due to nature and rates of existing liabilities Company will be looking for synergistic acquisitions If the stock buy back is not made one analyst said this could a very short tenure for new management team .