Consulting firm MarchFirst, on its last legs, began laying off employees Thursday after days and weeks of rumors that it would cut up to half its staff and reorganize.
A MarchFirst consultant who was laid off Thursday morning told CNET's News.com that investor Francisco Partners, which owns approximately one-third of MarchFirst, made the decision to cut staff. The consultant said he expects the company to issue a release formally announcing the layoffs later Thursday.
MarchFirst spokesperson Kelly Miller said she could neither confirm nor deny Thursday's report that layoffs are already under way at the beleaguered consultancy.
The New York Times reported Tuesday that MarchFirst would lay off up to half of its 7,200 employees by the end of the week, and that the company is considering splitting into three regional units, each funded by different outside investors. MarchFirst declined to comment on these reports at the time, but on Wednesday at 11:25 a.m. EST, the Nasdaq halted trading in the company's stock at 16 cents, effective until the exchange received unspecified additional information.
With a market cap now stuck at US$24.3 million, and with many observers and analysts already writing the company off as virtually worthless, MarchFirst finds itself with a $53 million outstanding loan obligation, the repayment deadline for which already has been extended one month, to April 16.
MarchFirst has been in a free fall ever since the company was created 13 months ago out of the merger between Midwest systems integrator Whittman-Hart and Internet consulting firm USWeb/CKS. In March, the company lost four of its top executives, including founder Bob Bernard. It is now being run by a three-person committee led by representatives of Francisco Partners who are directors of MarchFirst.
In November the company missed analysts' expectations for the third quarter and laid off 1,000 of its 10,000 employees. The company said in December that it needed additional financing to remain in business through January. At the end of 2000, Francisco Partners stepped in, providing more money than the company had requested. But less than a month later, the company cut an additional 550 jobs and consolidated several offices.
Now, news outlets and analysts issue daily reports of further layoffs, and they float the possibility of a bankruptcy filing and reorganization or a sale of parts of the company. One report suggests that the Internet incubator Divine Interventures might buy portions of MarchFirst's Chicago-based operations - the chunk of the company essentially composed of what's left of Bernard's Whittman-Hart.
Meanwhile, competing Internet consulting firm Viant Corp. (VIAN) said Tuesday that it has laid off 38 percent of its workforce and is closing several offices, citing an "increasingly challenging demand environment" that caused it to miss analysts' expectations.
Viant slashed 211 positions and will close its offices in Houston, San Francisco and Munich. As a result, the company said it will take a charge of $13 million to $17 million in the first quarter. It also said that on March 31, after the restructuring costs have taken effect, the company's cash position will be about $165 million. Viant said it expects to lose between 33 cents and 36 cents a share in the first quarter, compared with the 20 cent-per-share loss expected by analysts.