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Internet consultant Organic (Nasdaq: OGNC) has joined the growing list of former dot-com high fliers facing a Nasdaq delisting.
Late Tuesday, the San Francisco, California-based company said it is seeking a hearing from a Nasdaq panel to avoid delisting. Organic shares have not traded at the Nasdaq's minimum bid price requirement of US$1 per share since February.
If the shares are delisted, they could trade over the OTC Bulletin Board or the Nasdaq SmallCap Market, but securities traded on those are much less liquid, and a delisting usually makes it harder for a company to find financing.
Some companies avoid delisting, at least temporarily, through reverse stock splits that lift the value of their shares. Beyond.com (Nasdaq: BYND), Webvan (Nasdaq: WBVN) and Egghead (Nasdaq: EGGS) have all managed to retain their Nasdaq listing through reverse splits.
By the Books
Organic first warned of a slowdown in business in September, when it said it would not reach its original goal of attaining a profit in the third quarter of 2000. Instead, the company reported a wider loss, and has yet to regain its footing.
Organic has since said it aims to breakeven by the third quarter of this year.
In April, the company reported a loss for the first quarter ended March 31st of $20.19 million, or 23 cents per share, before charges, compared with a loss of $6.83 million, or 9 cents, in the same period a year earlier. Revenue fell to $14.33 million from $29.21 million.
Spending Cuts
Chief executive officer Mark Kingdon said at the time that the results reflected the "difficult market conditions" faced by Internet consultants, as clients "look for ways to manage their own spending levels."
Organic and other dot-com consultants are facing pressure because companies have cut back on spending for new technology, with many opting to bring their technology-management operations in house through acquisitions of Internet consulting companies.
For example, IBM (NYSE: IBM) recently (NYSE: IBM) bought Internet consultant Mainspring, while Compaq (NYSE: CPQ) in April announced plans to buy Proxicom, another consultant.
Job Cuts, Lawsuits
Organic has also been cutting jobs in recent months, eliminating about 300 positions in March as part of a plan aimed at cutting costs by some $50 million.
Organic shares opened Thursday at 36 cents. A year ago, they traded at close to $15. As a result of the decline, Organic -- again, like many former dot-com darlings -- is also facing lawsuits from shareholders who claim that executives misled them about the company's prospects.
Organic, with offices in North and Latin America, Asia and Europe, provides
services including online media buying and management, inventory and supply
management, customer relationship management and Internet design and
marketing. Company clients include DaimlerChrysler, Target and British
Telecommunications.
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