iXL cuts 850 employees in reorganization
The Internet consulting company says it will lay off about 850 employees, close or sell seven offices, and liquidate selected assets in an effort to turn around its battered business.
The layoffs, which amount to about 35 percent of the company's work force, are crucial to iXL's drive to cut costs and reach profitability in the first half of next year.
The Atlanta-based company, which helps clients develop Web sites and Internet strategies, said it is reorganizing to focus on serving large clients in the areas of travel, financial services and consumer packaged goods. The former Net highflier also is considering selling certain assets by the end of the first quarter of 2001.
The company plans to take a restructuring charge in the fourth quarter of 2000. In late trading, iXL shares were at $1, down 6 cents for the day. In the past 52 weeks, the shares have traded as high as $58.75.
"We are creating an extremely focused, tightly run company going forward," iXL chief executive Bertram Ellis said in a statement. "Although we are now a smaller company than we were six months ago, I believe this will make us a much stronger company as a result."
Ellis said the company will focus on serving its top 75 clients, which have included AT&T, Delta Air Lines, General Electric and Virgin.
Tuesday's restructuring follows staff cutbacks made earlier this year. In September, iXL slashed about 350 jobs after the company warned that third-quarter earnings would be weaker than expected. iXL president William Nussey also resigned shortly before the earnings warning and Ellis assumed his duties.
iXL and other Net consultancies, including Boston-based Viant, have been hit by weakened demand for Internet-related services as a result of many dot-com closures and investor pessimism for the sector. As a result, many companies have started to focus on selling services to larger, more traditional companies. But because these types of projects typically take longer to complete, analysts have said that earnings growth will not be as steep.
iXL plans to close or sell offices in Berlin, Denver, Hamburg, Los Angeles, Madrid, Sao Paolo and Tokyo within the next few weeks. It plans to maintain 10 offices, including those in Atlanta, Boston, London, New York, San Francisco and Washington, D.C., as well as a handful of smaller offices.
"All of our sales and client service operations will be centered around our top 10 offices, which are performing extremely well," Ellis said.