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Organic, Inc. (Nasdaq: OGNC) dropped 5/32 to 1 in the first few minutes of trading Thursday after the company, hit by an industry-wide slump, announced a restructuring and a new chief executive officer.
The San Francisco, California-based Internet consulting firm also said it expects results for the fourth quarter and for next year to be below previous expectations. Revenue for the quarter ending December 31st will be about US$26 million, roughly even with the year-earlier quarter and below third-quarter levels.
"The projected shortfall is due to a combination of budget reductions at several of our larger clients, the successful completion of project work during the third quarter that did not result in add-on opportunities moving forward, and a slower than anticipated realization of new business wins," said chief financial officer Sue Field.
Organic said Mark Kingdon, previously with Internet incubator Idealab!, will come on board as chief executive officer on January 15th. He replaces Jonathan Nelson, one of the company's founders and largest shareholders. Nelson will remain on the company's board, focusing on "long-term strategy and business development," Organic said.
The restructuring includes the firing of about one-quarter of the company's workforce, or the elimination of 270 jobs. Organic said it will close recently-opened offices in Atlanta, Georgia and Boston, Massachusetts.
The Boston office opened in September.
The moves will result in restructuring charges of $6 million to $8 million over the next two quarters.
"While our long-term outlook for our industry remains optimistic and our business development reorganization efforts are gaining momentum, current market conditions have dictated that we make the difficult decision to streamline our operations in order to achieve profitability in 2001," said Field.
The restructuring, she said, will save about $25 million a year.
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