Agency.com (Nasdaq: ACOM) fell 7/8 to 3Friday after the company announced a restructuring that includes the closingof its office in Vail, Colorado and lowered its projections for fourth-quarter earnings.
The New York-based Internet consultant said the restructuring involves 190layoffs, resulting in a charge of US$11 million to $14 million to fourth-quarter results.
The cuts will save $12 million to $16 million in 2001, the company said.
“We are taking this opportunity to realign our business to respond to therapidly changing demand environment for Internet consulting services,” saidchairman and chief executive officer Chan Suh.
The company said revenue for the fourth quarter will likely total $56million to $58 million, with earnings before extraordinary items of 4 to 7cents per share. Before the announcement, analysts had expected per-shareearnings of 7 cents.
In 2001, the company said, revenue should grow by 23 to 27 percent, withearnings per share growth of between 30 and 35 percent.
Analysts at Goldman Sachs and ING Barings had reportedly cut theirinvestment ratings on Agency.com in the days before the announcement.
The company is not the first Internet consultant to be hit this quarter bysoftening demand for Internet consulting. MarchFIRST, Viant, Scient, and aslew of other firms are suffering as dot-com clients, formerly big spenders,pinch their advertising dollars or go out of business, and others cut backon advertising expenditures.
In the third quarter, Agency.com said revenue rose 90 percent from a yearearlier, with a net loss of $39,000, or breakeven per share. The companysaid 98 percent of revenue during the quarter came from clients that are not dot-coms.