Some of the industrys top consulting execs are on double-secret probation, and several are about to flunk their way out of the market.
As we went to press, Breakaway Solutions founder and CEO Gordon Brooks stepped down, Viant CEO Robert Gett was under fire from his board of directors, and several consulting firms continued to cut staff and close offices amid the economic slowdown.
Proxicom, considered one of the stronger consulting firms, announced that it was cutting 19 percent of its staff to save about $35 million annually. Viant said it was undertaking a percentage cut twice that, closing its Houston, Munich and San Francisco offices.
Executives at both Proxicom and Viant talked about a spreading slowdown in Europe. Viant also adopted a shareholder rights plan to assure stockholders fair value in the event of a future unsolicited busi- ness combination. The company said it was not responding to any acquisition offers.
Rumors circulated last week that MarchFirst was about to lay off at least three thousand more employees, but the company, true to form, would not comment on the reports. It did disclose, however, that it has shut its venture capital operation. Nasdaq halted trading in MarchFirsts stock on Wednesday and requested information about the companys financial standing.
Xpedior, another seriously ill Internet consulting firm, voluntarily delisted itself from the Nasdaq last week.
"The e-services group has been completely obliterated," says Garry Dean, an analyst at Robert W. Baird. He doesnt believe the entire sector will disappear but noted that firms like MarchFirst "could close their doors or simply retrench into much smaller regional players over the next six months."
Despite the bad news, about half the stocks in our index rose last week. Winners included C-bridge Internet Solutions, which qualified as a Premier member of IBMs Web Integrator Initiative, and iGate Capital, whose Mascot Systems unit signed a $3.3 million IT outsourcing contract with a technology company that it declined to identify.
Scient also rose amid continued takeover rumors. Possible suitors include Hewlett-Packard, as we reported here last week. HP declined to comment, as did Scient.