Forecasters Reduce Staff

Many of technologys most celebrated seers never saw the downturn coming. Now that it has crushed the dot-com world, drained venture capitalists bank accounts and made Cisco Systems look like a tired Old Economy company, the prognosticators are the ones paying the price.

Gartner Group became the third major firm to announce layoffs last week, when it said it would cut staff, including analysts, by 5 percent to 7 percent. It also said it would hold its consultant payroll at less than 800 professionals, instead of the 1,000 previously planned. Those moves are supposed to save $30 million per year.

Gartners cutback follows Meta Groups 15 percent reduction in its work force. The 100-employee cut was part of a restructuring plan that included the resignation of Larry DeBoever from his post as president, as well as that of Peter Burris, co-research director at Meta Group and president and CEO of Metagroup.com.

The Metagroup.com online service, begun in April 2000, is no longer a separate operation, but still offers research to clients.

“We dont expect to grow much this year,” said Dale Kutnick, CEO of Meta, in an interview last week. “We are going to slow down our growth and focus on profitability.”

Prior to the recent downturn, Meta grew 30 percent annually for 10 years, and built an infrastructure to support that growth.

“The industry is slowing down a little bit,” Kutnick said. “Maybe a lot.”

The cutbacks did not affect client services, and only a few analysts in training were affected, Kutnick said. This year Meta will focus on helping clients contain costs and improve business operations, he said.

Days before the Meta pullback, The Yankee Group said it would let go 41 employees, or 13 percent of its staff in all departments. At least 14 of those slated to go were analysts, according to reports that The Yankee Group would not confirm. A spokeswoman said the reductions were made because revenue did not grow as fast as expectations.

Forrester Research is one of the few brand-name firms that has not announced layoffs.

Forresters revenue in 2000 was up 80 percent, to $157 million, and net income rose 86 percent, to $11.6 million, compared with 1999. Forrester projects revenue growth of about 50 percent this year, and earnings-per-share growth of 25 percent to 30 percent. Executives at Forrester have been selling stock consistently for the last year.

Steve Lidberg, an analyst at Pacific Crest Securities, noted that Forrester has been the one stock among the group that has held up. He projects first-quarter revenue of $45.6 million, and $4.8 million in profit. “They will continue to execute,” he said. “They are one of the better market research firms, with a focus on the broader view of things.”