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 endingDecember 31st will be worse than previously expected.
The San Francisco, California-based firm said anindustry-wide slowdown put pressure on results. To cope with the changingmarket, Scient said it will eliminate about 460 jobs worldwide, resulting ina charge of US$40 million to $45 million. The restructuring includes theclosing of the company’s offices in Silicon Valley andAustin, Texas.
Revenue for the third fiscal quarter will be about $80 million, with a proforma operating loss of about $13 million, or 16 cents per share, beforerestructuring charges, Scient said.
Chief financial officer Bill Kurtz said the cuts will save about $60 millionin calendar 2001. “Our financial position remains strong, and our cashbalance should approximate $150 million at the end of the December quarter,”he said. “We remain committed to our goals of generating positive operatingcash flow in fiscal year 2002 and long-termoperating margins in the 15 to 20 percent range.”
Scient said a “broad-based economic slowdown” led many clients to reducespending on technology, with larger companies feeling a “lack of urgency” tofund big projects and smaller ones having a hard time finding financing.Tougher competition from old-line and new economy companies also contributedto the revenue shortfall, the company said.
“The combined effect of these market factors has required swift, correctiveaction,” said chairman and chief executive officer Bob Howe. “We believe theactions we are taking will better align our capacity with current marketdemand.”
Scient joins a growing number of e-commerce services businesses — Xpediorand Lante Corp. issued similar announcements in recent days — that arecutting back in response to a changing market.
Scient said it will provide guidance about future quarters afterthird-quarter results are released.