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Net consulting firm looks to reap $54 million in IPO

With its Nasdaq Stock Market debut next week, Zefer is hoping to make its mark in the already crowded e-commerce consulting field.

With its Nasdaq Stock Market debut next week, Internet consulting firm Zefer is hoping to make its mark in the already crowded e-commerce consulting field.

The Boston-based firm, which filed for its initial public offering in early January, recently increased its offering to 4.5 million shares from 4 million, with an asking price of between $11 and $13 a share. The company is aiming to raise about $54 million.

Zefer is stepping into a crowded ring of players that include iXL Enterprises, Scient, Viant, Razorfish, AppNet and Proxicom, which have done fairly well since going public, grabbing the attention of Wall Street as demand for their services continues to explode.

So-called pioneers Scient, Razorfish and Viant, which began trading around the same time last year, are still experiencing a positive stock run, trading well above their opening prices. Scient, which opened at $20 a share, is trading in the $60 range. The company, which has yet to turn a profit, holds a market capitalization of $4.6 billion.

Despite the glut of these types of firms, which provide businesses with a range of Web services including strategy, business consulting, marketing and design, analysts say there is plenty of work to go around.

"At the end of the day, there's much more work to be done than there are firms to do it," said Preston Dodd, a senior analyst at Jupiter Communications, who noted that most of the top Internet consulting firms are turning away work. "Right now, (the services market) is still pretty wide open. Companies are still figuring out what to do (online)."

Susan Scrupski-Miranda, who heads IT Services Advisory, added that an apparent lack of differentiation between firms has not hurt customer demand.

"There is no real differentiator in these firms, but they don't need it right now," she said. "The demand is staggering. It's being fueled by every single corporation, whether it is midsized, dot-com start-up; every single enterprise on the planet is moving onto the Web."

Zefer's biggest challenge may be in stirring investor interest in a highly volatile market. Recent IPOs of services firms, such as Organic, Digitas and, failed to match the successes of high-flying predecessors, mainly because of shaky market conditions.

Internet consulting firm Digitas, which debuted last month, is trading lower than its opening price of $24 a share. Today, Digitas closed up $1.50 at $19.25. Organic, whose services focus on Web design, marketing and brand building, opened at $20 a share when it went public in February. Now, the 7-year-old firm is trading closer to the $17 range after hitting a high of $60 on its first day of trading.

Disregarding the volatile market conditions, analysts say Zefer has a good chance of raising the cash it needs.

Mark Wolfenberger, an analyst at Credit Suisse First Boston, which is managing Zefer's IPO, said the company has no plans to change or delay IPO dates because of market jitters.

"(Zefer) seems to be relatively unaffected at this point from the volatility in the market," said Wolfenberger, whose firm also managed IPOs for Razorfish and AppNet. "At the end of the day, good stories do well regardless of the market."

Founded last year by former McKinsey & Co. colleagues Anthony Tjan and Kaming Ng, the company is being led by Bill Siebel, who was part of the original management team at systems integrator Cambridge Technology Partners. Zefer, which has about 480 employees, has opened offices in Boston, Chicago, New York, Pittsburgh, San Francisco and London.

The company plans to begin trading next week under the ticker symbol "ZEFR."