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Internet consulting company Scient (Nasdaq: SCNT) was down 2 1/16 at 2 7/16 early Thursday after the company said results for the quarter ending December 31st will be worse than previously expected.
The San Francisco, California-based firm said an industry-wide slowdown put pressure on results. To cope with the changing market, Scient said it will eliminate about 460 jobs worldwide, resulting in a charge of US$40 million to $45 million. The restructuring includes the closing of the company's offices in Silicon Valley and Austin, Texas.
Revenue for the third fiscal quarter will be about $80 million, with a pro forma operating loss of about $13 million, or 16 cents per share, before restructuring charges, Scient said.
Chief financial officer Bill Kurtz said the cuts will save about $60 million in calendar 2001. "Our financial position remains strong, and our cash balance should approximate $150 million at the end of the December quarter," he said. "We remain committed to our goals of generating positive operating cash flow in fiscal year 2002 and long-term operating margins in the 15 to 20 percent range."
Scient said a "broad-based economic slowdown" led many clients to reduce spending on technology, with larger companies feeling a "lack of urgency" to fund big projects and smaller ones having a hard time finding financing. Tougher competition from old-line and new economy companies also contributed to the revenue shortfall, the company said.
"The combined effect of these market factors has required swift, corrective action," said chairman and chief executive officer Bob Howe. "We believe the actions we are taking will better align our capacity with current market demand."
Scient joins a growing number of e-commerce services businesses -- Xpedior and Lante Corp. issued similar announcements in recent days -- that are cutting back in response to a changing market.
Scient said it will provide guidance about future quarters after
third-quarter results are released.
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