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Organic laying off hundreds

The Internet consulting company is cutting about 300 jobs, or 35 percent of its work force, and says its shares face delisting from the Nasdaq.

In a severe cost-cutting move, Internet consulting company Organic will lay off about 35 percent of its work force and said that it has received notice that company shares could be delisted from the Nasdaq.

The San Francisco-based company said on Thursday it is laying off about 300 people, leaving the company by the end of its second quarter with about 525 employees. The layoffs are part of a larger business restructuring to adapt to tough market conditions, Organic said.

Organic expects to record a restructuring charge of approximately $17 million to $20 million in the first quarter to cover severance and other costs.

Thursday's layoffs aren't the first for the upstart Net consultancy. In December, Organic eliminated 270 jobs.

Organic is part of the laundry list of similar companies that have used layoffs and other cost-cutting measures to counter the dot-com shakeout. Internet consultancy MarchFirst informed its employees of layoffs Thursday, offering most of them only a two-week severance package. Razorfish also cut staff this month.

Tom Rodenhauser, an industry analyst who heads Consulting Information Services, said the consulting industry is the type of "roller-coaster" business that has booms and busts. He added that Organic may be treading on thin ice, as this round is its second cost-cutting effort in just four months.

"In professional services, one round of layoffs is acceptable, two rounds is dangerous, three is usually fatal," Rodenhauser said.

Rodenhauser, however, said that many Internet consulting companies have been working with clients that cannot afford to pay for its services. He added that when a company starts cutting its real assets, like its employees, it is saying that the company does not have enough business to keep them busy.

Organic also said Trading on thin iceThursday it received a letter from the Nasdaq notifying the company of its non-compliance with the market's minimum bid price requirement of $1. Organic said the Nasdaq has provided the company with 90 days or until June 26, to regain compliance with this requirement.

As Organic tries to grow its business by expanding its marketing alliances and examining new strategic and financial relationships, the company remains confident that its client roster is strong.

"While our long-term outlook remains optimistic and our business development reorganization efforts are gaining momentum, current market conditions have dictated that we act decisively now," Organic Chief Executive Mark Kingdon said in a statement.