Monday February 5, 7:59 pm Eastern Time
Razorfish to cut 400 jobs worldwide in restructuring
(UPDATE: Adds details, company and analyst comments, byline, previous NEW
YORK)
By Lisa Baertlein
PALO ALTO, Calif., Feb 5 (Reuters) - Razorfish Inc. (NasdaqNM:RAZF - news), which provides Internet Web design and
consulting services, said on Monday it was cutting more than 20 percent of its global work force as part of a cost-cutting plan
aimed at saving the company about $70 million in 2001.
New York-based Razorfish, which was founded in 1995, said it was eliminating 400 jobs from its total work force of about
1,900 in an effort to improve profitability and shareholder value.
The company also said it was restricting expense policies in certain areas, streamlining some regional departments and
expanding its use of partnerships and alliances as part of the restructuring program. Company officials declined comment
through a spokeswoman.
``We have initiated several important changes that will allow us to better serve our clients, increase our revenues and quickly
return us to the profitability that has defined our business for over five years,'' Jeff Dachis, Razorfish's chief executive, said in a
statement.
Razorfish shares, which a year ago was trading around its high of $56-15/16, fell to $1 in December. Shares lost 5/32, about 8
percent, to finish the session at $1-13/16 on Monday.
DOT-COM FAILURES IMPACT INDUSTRY
Net consulting companies -- including Razorfish, MarchFirst (NasdaqNM:MRCH - news), Scient Corp. (NasdaqNM:SCNT
- news), Sapient Corp. (NasdaqNM:SAPE - news) and Viant Corp. (NasdaqNM:VIAN - news) -- soared during the
dot-com craze and have issued profit warnings and trimmed jobs in the wake of the dot-com meltdown.
In December, Dachis warned that Razorfish would likely post a fourth-quarter loss of between 17 cents and 22 cents rather
than the 2 cent profit Wall Street had expected. He blamed a slowdown in corporate tech spending and said that sales cycles
were getting longer as Internet projects increased in size and and complexity.
Robertson Stephens Analyst Steven Birer welcomed the company's restructuring plan, which he had hoped to get when the
company issued its fourth-quarter warning.
``I think this is an admission that they have more then enough employees to get the work done,'' he said.
On a cautionary note, Birer said that the cost-saving measures announced Monday are based on the company's revised $50
million revenue target. If the company's sales fall below that, expenses will weigh heavily on results.
Many of the troubled Internet-focused consulting firms now are targeting large, established companies in an effort to boost
revenue.
That shift, however, is not without its challenges.
Established companies are not as loose with money as venture capital-funded start-ups had been and consultants must invest
more time and effort to woo them as customers.
On the competitive side, the troubled consulting firms are likely to bump into larger, more diversified shops such as Computer
Sciences Corp. (NYSE:CSC - news) and Electronic Data Systems (NYSE:EDS - news) as they seek new business in that
realm.
Gruß Dampf