Quarterly loss sinks MarchFirst stock

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Shares of MarchFirst dropped 35% on Feb. 13 to close at $1.62, just one day after the company posted a fourth-quarter loss of $6.8 billion. The Chicago-based provider of Internet professional services said it lost $37.09 a share in the fourth quarter compared with year-earlier net income of $8.4 million, or 12 cents a share. Excluding certain items, MarchFirst lost $73.2 million, or 40 cents a share, compared with a loss of $10.9 million, or 16 cents a share a year ago. Analysts had expected the company to lose 30 cents a share in the quarter. MarchFirst took in $213.5 million in revenue during the quarter, compared with $133 million in the year-earlier quarter.

Though business continues to slow, MarchFirst CEO Bob Bernard said in the statement that the company's recent layoffs and other cost-cutting and reorganization efforts will pay off. "Clearly, market conditions are difficult, but we've taken decisive steps to move the company forward," he said. In November, MarchFirst laid off 1,000 of its 10,000 employees; at the end of January, 550 more jobs were cut and several offices were consolidated. The company currently has 7,600 employees. In December, Francisco Partners provided MarchFirst with $150 million in funds in exchange for preferred stock convertible to 32% of the company's common shares and two seats on the board of directors.

MarchFirst took charges totaling $6.5 billion in the fourth quarter related to lowered expectations of the value of the merger between Whittman-Hart and USWeb/CKS that created MarchFirst. The company also said it expects to record a total charge of $130 million related to recent layoffs, $48.9 million of which it recorded in the fourth quarter, the rest to be counted in the current quarter. For the first quarter of 2001, the company expects a supplemental loss of 22 cents to 31 cents per share on revenues of $190 million to $215 million.

Copyright February 2001, Crain Communications Inc.

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