Sapient Cuts 720 Jobs - and Its Estimates

Mar 02 2001

Sapient , a top Internet consulting firm, said Friday that it will lay off 720 employees, or 20 percent of its staff, as part of a plan to save up to $60 million after revising its quarterly estimates.

The company said it will close its 70-person Sydney office and consolidate office space in cities with multiple rents. In the current quarter, the company will take a charge of $35 million to $40 million related to the reorganization and to severance expenses. Sapient said it expects to save $5 million in the first quarter, and $60 million to $65 million on over the next 12 months.

Sapient also said its first-quarter revenues would come in 20 percent lower than analysts' expectations of $136 million. The Cambridge, Mass.-based company also said it would report a pro forma loss of 3 cents to 5 cents per diluted share rather than the profit of 9 cents that analysts expected. Sapient also said its cash position would be about $250 million at the end of the first quarter.

The company was once considered unshakeable in delivering consistent growth in line with expectations, but Sapient's profit warning was its second in as many quarters. Executives at rivals and clients consider Sapient one of the best consultantcies for its ability to execute and deliver on promises to Wall Street. Its inability to predict the strength of the consulting business demonstrates how deeply firms are being affected by the overall economic downturn.

"The economic environment in North America has become much tougher than we expected," said Sapient CEO Jerry Greenberg in a release Friday. "We believe these actions will allow Sapient to continue to be a leader."

At 11:29 a.m. EST, Sapient was down 30.77 percent, or $4, to $9.

The company said it experienced weakness mainly in its U.S. business, while its business in Europe remained strong. At the beginning of January, Sapient lost nearly a third of its value after saying it would miss its fourth-quarter revenue expectations.