Organic, Inc. (Nasdaq: OGNC) dropped5/32 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 chiefexecutive officer.
The San Francisco, California-based Internet consulting firm also said itexpects results for the fourth quarter and for next year to be below previousexpectations. Revenue for the quarter ending December 31st will be about US$26million, roughly even with the year-earlier quarter and below third-quarterlevels.
“The projected shortfall is due to a combination of budget reductions atseveral of our larger clients, the successful completion of project workduring the third quarter that did not result in add-on opportunities movingforward, 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!, willcome on board as chief executive officer on January 15th. He replaces JonathanNelson, one of the company’s founders and largest shareholders. Nelsonwill remain on the company’s board, focusing on “long-term strategy andbusiness development,” Organic said.
The restructuring includes the firing of about one-quarter of the company’sworkforce, 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 millionover the next two quarters.
“While our long-term outlook for our industry remains optimistic and ourbusiness development reorganization efforts are gaining momentum, currentmarket conditions have dictated that we make the difficult decision to streamlineour operations in order to achieve profitability in 2001,” said Field.
The restructuring, she said, will save about $25 million a year.