iXL tumbles on profit warning, downgrade

iXL shares plunged 2 11/32, or 28 percent, to 6 1/32 Tuesday after it said it would take a loss in its third quarter.

Company officials said it now expects third-quarter sales to fall between 15 percent to 20 percent from the $119 million it recorded in the second quarter.

It also announced the resignation of President William Nussey.

First Call Corp. consensus had pegged iXL for a profit of 4 cents a share in the quarter.

On Tuesday, First Union Securities cut the stock from a "buy" recommendation to a "hold."

In a prepared release, iXL cited a slowdown in client purchasing of its general business strategy services and an increased sales cycle for its services targeted for the Global 1000.

"Despite continued strong demand for our services, larger clients are focusing on bigger, more complex projects, which has resulted in extended sales cycles," said CEO Bert Ellis in a prepared release. "We believe we are responding appropriately to these recent trends, although we expect our revenue in the second half of 2000 to be below forecasts."

Ellis will serve as the company's president while co-founder Barry Sikes will resume the role of chief operating officer, replacing Niraj Shah. Shah will return to his previous role as iXL's executive vice president of worldwide operations.

iXL's profit warning comes on the heels of a similar preannouncement from fellow Internet consulting firm Viant (Nasdaq: VIAN) on Thursday.

Viant shares collapsed to a 52-week low Friday as investors digested the news.

Last quarter, iXL beat the Street when it posted a profit of $3.4 million, or 5 cents a share, on sales of $119 million.

All eight analysts following the stock maintain either a "buy" or "strong buy" recommendation.

iXL shares peaked at 58 3/4 in January.