MarchFirst Lays Off 260 Workers

SAN FRANCISCO (06/08/2000) - MarchFIRST, the combined entity of technology-consulting firm Whittman-Hart and Internet marketing-consulting firm USWeb/CKS, has laid off 260 employees from the beginning of January through the middle of May, CEO Robert Bernard said yesterday.

Another 30 employees have agreed to take severance packages and stay on at the company through its third quarter. Swinging a heavy post-merger ax, MarchFIRST has moved quickly since January to eliminate employees in human relations, accounting, finance, payroll and billing. Bernard said the posts were "redundant" after the company began building out Whittman-Hart's corporate office in Chicago to serve the entire organization. The company laid off 110 employees of the former USWeb/CKS, based in San Francisco, and 20 employees of the Mitchell Madison Group in New York, a strategy-consulting unit of USWeb/CKS. USWeb/CKS' professional-services staff was equally touched by the layoffs, though they were a bit more spread out across the company's U.S. offices.

MarchFIRST laid off 130 technology professionals working on Y2K, mainframe and IBM legacy systems, Bernard said, because Whittman-Hart's own technology-consulting business is well-enough staffed to deal with those types of projects. Bernard noted that services staff was not laid off at Mitchell Madison. Even though attrition at the company is running at a nearly 25% annual rate, the company has successfully recruited back 20 Mitchell Madison professionals who left during the past six months. While visiting MarchFIRST's New York office Tuesday, Bernard called the ongoing efforts to integrate the combined company a nonissue. "We're focused on gaining market share in the fastest-growing cities in Europe and the U.S.," he said.

Whittman-Hart announced that it would acquire USWeb/CKS in mid-December, creating a $14 billion consulting-industry giant. But Wall Street didn't buy into the merger of the two distinct companies, and investors effectively lopped off a third of each company's market capitalization after the announcement. The combined company renamed itself MarchFIRST as the deal was closed.

Founded in 1984, Whittman-Hart had grown largely organically and was viewed as a relatively conservative investment. USWeb/CKS, by contrast, opened up shop in 1995 and grew through more than three-dozen acquisitions, including that of strategy-consulting firm Mitchell Madison Group in August 1999. The company's lack of a coherent culture was viewed as both a strength and a weakness, but analysts questioned how well the two companies would work together and how their very different client lists would mesh to form a strong business.

MarchFIRST's valuation is less than half of what it was on Dec. 13, the day the USWeb/CKS and Whittman-Hart deal was announced. At that time, the combined stock price for the two companies was about $54.50 per share. After hovering in the high teens at the end of May, MarchFIRST's stock gained a few points in June, closing at $23.94 Tuesday.

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