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Razorfish, Inc. (Nasdaq: RAZF) was up 19 U.S. cents at $2 in Tuesday morning trading, a day after the Internet consulting company announced further cost cuts in a restructuring plan.
The New York City-based company's "performance improvement plan," aimed at saving about $70 million this year, includes the elimination of some 400 jobs worldwide.
Razorfish chief executive officer Jeff Dachis said that since putting the plan in place last October, "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."
The company's latest cost-cutting announcement was "positive," according to Steven Birer, e-services analyst at Robertson Stephens.
"We believe that the technology spending slowdown will extend through the first half of 2001, and that without these cuts the company would face critical funding issues," Birer wrote. "In our view, [Monday's] announcement is therefore a welcome sign and an indication that management has not only acknowledged the adverse effects of the industrywide slowdown on Razorfish, but also begun taking the necessary steps to allow the company to survive."
Razorfish said that it will concentrate on five key industries -- financial services, technology and telecom, media and entertainment, manufacturing, and healthcare -- in order to provide the best returns.
To save money, the company said it will consolidate functions such as accounting, human resources and information services at a regional level, and put in place "restrictive expense policies" regarding travel, recruiting, facilities and marketing programs.
In addition to the job cuts, the company said it is planning "new incentive and compensation plans" for all levels of employees.
Razorfish announced in December that it expected a loss for the fourth quarter ended that month. Like other companies that provide services to the Internet sector, Razorfish has been hit hard by a slump in demand.
"The market for our services has changed dramatically, and we underestimated the magnitude of this shift," Dachis said in January. At the time, he said the company had "no plans to undergo any significant staff reductions."
Razorfish shares are down from a 52-week high of $56.94, set last February
14th. The shares reached a low of $1 in December.
