Huge Cuts Hit Sapient
The Cambridge, Mass., Internet consultancy had been one of the few in a battered sector to avoid wholesale layoffs. No more -- it's slashing 720 workers, a fifth of its staff.
Sapient , a Cambridge, Mass., Internet consultancy that until today had been one of the few companies in a battered sector to avoid wholesale layoffs, is slashing 720 workers, a fifth of its staff, across the United States and in Australia.
The company also drastically lowered its first quarter revenue and earnings outlook.
It said revenue would be down 20 percent from analyst predictions of $136 million and that it would lose between 3 and 5 cents per share, a startling turnaround from analyst predictions of a 9 cent per-share profit.
In the 2000 fourth quarter Sapient made 10 cents per share on revenue of $139.2 million.
Sapient’s job cuts affect operations in the United States and Sydney, which is seeing its 70-person office close.
Without giving details, the company said it would consolidate office space in cities with multiple offices to save rent costs. Sapient has two offices in Cambridge, Atlanta, Chicago and New York City, and three in San Francisco.
The reorganization will cost between $35 million and $40 million in the first quarter in severance and other expenses. Sapient said the cuts would save $5 million in costs in the first quarter and between $60 million and $65 million each year.
Sapient said it would maintain all the services it now provides in helping businesses set up Web sites and online strategies. But it said it would change its “skill-set mix” to reflect what customers want, presumably with a greater emphasis on wireless strategies.
Sapient said that its offices in Europe,”where the economic environment is markedly different” and revenue is growing, would continue to hire new workers.
Jerry A. Greenberg, co-chairman and co-chief executive officer, said, “The economic environment in North America has become much tougher than we expected. This has resulted in our making difficult, but needed, decisions about our people and costs, particularly in the United States. We believe these actions will allow Sapient to continue to be a leader” in the e-consulting space.
Sapient said it would have $250 million in cash remaining at the end of the current quarter. But it declined to give guidance for the rest of the year, citing “the uncertainties of the marketplace.”
In morning trading following the announcement, SAPE was down 2.812, or 22 percent, at 10.188. Over the last year it has traded between 8.938 and 74.531.
