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Razorfish on the ropes

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New York--Internet consultancy Razorfish Inc. reported a second-quarter net loss of $137.11 million, compared with income of $5.14 million in the year-earlier period. Revenues totaled $28.7 million, down from $76.6 million a year earlier. The company also continued its international retrenchment, closing its Helsinki and Milan offices.Much of Razorfish' loss can be chalked up to a recent $70 million restructuring charge that included write-offs on unused equipment and severance packages. Razorfish, closely associated with the rise and fall of New York's Silicon Alley, recently finished laying off 600 people, leaving the firm with 670 employees.Despite the setbacks, CEO Jean Philippe Maheu, who replaced co-founder Jeffrey Dachis and took the newly created title of co-chairman, found reason to be optimistic. "In this very difficult environment, our operational performance improved in second quarter as compared to our first quarter with higher gross margins [35% versus 32%]," Maheu said in a statement. Razorfish has been trying to attract large clients, and Maheu noted the recent landing of GlaxoSmithKline plc and the Canadian Broadcasting Corp. as customers. Its longstanding large clients include Ford Motor Co. and Deutsche Bank AG.Razorfish is currently forgoing broad advertising campaigns in favor of industry-specific seminars. To oversee the effort, it hired Gerry Berton, former VP-marketing programs at Key3Media Inc., as VP-marketing programs, a newly created position. It is concentrating on industries known for spending big on consulting fees, including financial services and manufacturing. In a recent interview with BtoB, Berton, who works out of the company's Boston office, said Razorfish needed to increase its focus on marketing to stand out from its better-branded Big 5 competitors. "What that all boils down to in the past for our sector is that no one was aggressive about marketing," he said. "Razorfish had more people coming to it than it could handle, and so did everyone else." Razorfish's woes correspond with those of its closest competitors, including Agency.com Ltd. and the now-defunct MarchFirst Inc.

--Philip B. Clark

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