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Agency.com cuts 4Q estimates, lays off 190

2 min read

Agency.com followed the pattern established by larger Internet consulting firms Thursday, warning that its fourth-quarter earnings will estimates. It also axed 190 employees.

Agency.com (Nasdaq: ACOM) shares closed unchanged at $3.88 ahead of the warning.

Company officials said it now expects to earnings of between 4 cents to 7 cents a share this quarter, meaning it will likely miss the current First Call Corp. consensus estimate of 7 cents a share.

It will also take a restructuring charge of between $11 million to $14 million in the quarter.

The restructuring, which includes the closure of its Vail, Colo., office, will ``more properly align its capacity with the changing demand environment for Internet services,'' the company said in a statement.

It expects sales for the fourth quarter to total $56 million to $58 million, compared with $31.3 million in the year earlier period.

“We are taking this opportunity to realign our business to respond to the rapidly changing demand environment for Internet consulting services,” said CEO Chan Suh in a prepared release. “We are taking these steps now to protect our profitability and in an effort to align our business to deliver revenue and earnings growth in 2001.”

Agency.com’s warning comes on the heels of similar warnings from the likes of Scient (Nasdaq: SCNT), Viant (Nasdaq: VIAN) and Razorfish (Nasdaq: RAZF).

Last quarter, Agency.com hurdled analysts’ estimates when it posted a profit of $3.1 million, or 7 cents a share, on sales of $57.3 million.

The stock surged to a high of $61.75 last December before falling to a low of $3.44 earlier this month.

All six analysts following the stock rate it either a “buy” or “strong buy.”

First Call Corp. consensus expects it to earn 36 cents a share in the fiscal year.