Razorfish, Inc. (Nasdaq: RAZF) was up 19 U.S. cents at $2 in Tuesday morning trading, a day after the Internet consulting company announced further cost cuts in a restructuring plan.
The New York City-based company’s “performance improvement plan,” aimed at saving about $70 million this year, includesthe elimination of some 400 jobs worldwide.
Razorfish chief executive officer Jeff Dachis said that since putting the plan in place last October, “we have initiated severalimportant changes that will allow us to better serve our clients, increaseour revenues and quickly return us to the profitability that has defined ourbusiness for over five years.”
The company’slatest cost-cutting announcement was “positive,” according to Steven Birer, e-services analyst at Robertson Stephens.
“We believe that the technology spending slowdown will extend through thefirst half of 2001, and that without these cuts the company would facecritical funding issues,” Birer wrote. “In our view, [Monday’s] announcement is therefore a welcome sign and an indication that managementhas not only acknowledged the adverse effects of the industrywide slowdownon Razorfish, but also begun taking the necessary steps to allow the companyto survive.”
Razorfish said that it will concentrate on five key industries — financialservices, technology and telecom, media and entertainment, manufacturing,and healthcare — in order to provide the best returns.
To save money, the company said it will consolidate functions such asaccounting, human resources and information services at a regional level,and put in place “restrictive expense policies” regarding travel,recruiting, facilities and marketing programs.
In addition to the job cuts, the company said it is planning “new incentiveand compensation plans” for all levels of employees.
Razorfish announced in December that it expected a loss forthe fourth quarter ended that month. Like other companies that provideservices to the Internet sector, Razorfish has been hit hard by a slump indemand.
“The market for our services has changed dramatically, and we underestimatedthe magnitude of this shift,” Dachis said in January. At the time, he saidthe company had “no plans to undergo any significant staff reductions.”
Razorfish shares are down from a 52-week high of $56.94, set last February14th. The shares reached a low of $1 in December.