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Consulting firm Xpedior to cut staff, close offices

The struggling Internet consulting company intends to close several offices and trim nearly 32 percent of its staff as part of a plan to shift its business focus.

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Struggling Web consultancy Xpedior said Tuesday it intends to close several offices and trim nearly 32 percent of its staff as part of a plan to shift its business focus.

The company, which has been battling a string of bad news in recent months, including disappointing financial results and a hard-hit stock price, said it will begin emphasizing its core strengths in providing clients help with integrating their Web-based systems with traditional applications.

In addition, Xpedior, based in Chicago, will focus on serving clients that compete in several specified markets including retail and distribution, telecommunications, and financial services.

As part of the move, the company will close several "unprofitable" offices and cut about 380 consultant, administrative and support personnel. Xpedior is shutting down offices in Houston, Landover, Md., Los Angeles and San Francisco. A company representative said half of the employees from the San Francisco office will be moved to its Silicon Valley location in San Jose, Calif.

Xpedior, which employed about 1,200 workers, said it will still operate offices in Chicago, Alexandria, Va., New York, Denver, San Jose, Calif., and Dallas. The company also has offices in Australia, Canada, Europe, Latin America and Southeast Asia.

Like a number of players in the Internet consulting market, Xpedior has suffered from weakened demand for Internet-related services as a result of many dot-com closures and investor pessimism for the industry. In September, Xpedior reduced its staff by 16 percent, resulting in approximately 270 layoffs.

Many of its competitors, including iXL Enterprises, Viant and MarchFirst, have started to focus on selling services to larger, more traditional companies, which tend to have projects that typically take longer to complete. But because of the lengthier sales cycles, analysts have said that earnings growth will not be as steep as it once was for many of these former highfliers.

Just last week, iXL said it is reorganizing to focus on serving large clients in the areas of travel, financial services and consumer packaged goods. The company has also recently laid off about 850 employees and said it plans to close or sell seven offices and liquidate selected assets to try to turn around its battered business.

Xpedior, which has seen its shares plunge 97 percent for the year, expects to record a one-time charge in its fourth quarter for costs related this reorganization and prior acquisitions.

The company said despite the current market downturn for Web-related services, it believes demand for its type of services will strengthen and enable the company to reach profitability.