New Rules: Get Big or Get Lost

 
 
By eweek  |  Posted 2001-03-05
 
 
 

Out of sight, out of mind, out of business. Thats the downward spiral that appears to be engulfing many former Web consulting hotshots. Their market capitalizations have fallen so low in recent weeks that theyve dropped off the radar screens of the top Wall Street investment houses.

Once the analysts stop paying heed, so do Fortune 1000 clients. All the while, losses and layoffs mount and overhead costs—which typically average about 50 percent among Web integrators—continue to strangle their bottom lines.

Its a grim picture and theres no letup on the horizon, argues Marty Wolf, a mergers and acquisitions specialist. "There may not be a future for most of the small, independent e-biz integrators," he says.

Executives at Lante Corp., whose stock has fallen from a high of $87.50 to less than $2—below the companys cash on hand—arent about to give in to such pessimism, but they acknowledge the need to do something dramatic in this market.

A source close to Lante says it has retained investment banker Robertson Stephens to help in the search for an acquisition. The ideal candidate, he notes, is another consultant with access to blue-chip customers, complementary skills and the ability to help Lante get back on the profitability track quickly. An acquisition also would boost the firms sinking market cap.

The source says while Lante would much prefer to make an acquisition, as a public company it cannot afford to ignore a decent buyout offer. The former client/server integrator has clung fast to its independence over the past decade, rejecting countless offers from larger integrators like Perot Systems.

"Mark Tebbe [Lantes founder and major stockholder] is one of the most independent-minded executives in the industry," says the source. "But he has to be open-minded now about the companys prospects."

Meanwhile, Lantes business model and staffing requirements have undergone considerable changes in the last few months. The company had sought to be a leading provider of design and development services for B2B marketplaces, but the collapse of that market altered its strategy.

Now Lante wants to help clients leverage the opportunities in those e-marketplaces that survive.

Toward that end, Lante has been trimming staff—particularly within the ranks of its Web developers. Since December it has laid off more than 30 percent of its 600-member workforce.

Rick Gray, Lantes VP of marketing, declined to comment on the companys acquisition plans, except to note that "there is no news to report."

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