Sapient (Nasdaq: SAPE) was down US$3.88 at $9.13 in morning trading Friday, after the information-technology consultantsaid first-quarter results will fall short of previous expectations.
Sapient also announced that it is cutting jobs and consolidating operations in order to deal with a weakened U.S. economy.
The company said it will cut about 20 percent of its workforce, letting go 720people, as it closes its Sydney, Australia office and consolidates facilitiesin other locations.
“The economic environment in North America has become much tougher than weexpected,” said Jerry A. Greenberg, co-chairman and co-chief executiveofficer of the Cambridge, Massachusetts-based company. “This has resultedin our making difficult, but needed, decisions about our people and costs,particularly in the United States.”
The job cuts and office closings will result in a charge of $35 million to$40 million to first-quarter earnings. The moves, however, will save $60million to $65 million a year, the company said.
Because of the “uncertain economic outlook,” Sapient said it expectsfirst-quarter revenue to be about 20 percent below the $136 million expectedby analysts, with a loss before acquisition charges, restructuring costs andother items of 3 to 5 cents per share.
Sapient said it will have about $250 million in cash at the end of thequarter.
The job cuts affect only the 70-person Sydney office and offices in theUnited States, Sapient said. In Europe, where “the economic environment ismarkedly different,” the company said it plans to continue to expand.