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Net consultant Zefer again withdraws IPO

For the second time, the company scratches its plans to go public, citing inauspicious market conditions.

For the second time, Net consulting company Zefer has pulled its plans to go public, citing market conditions.

The Boston-based company had intended to offer 4.5 million shares at an estimated price range of $9 to $11 per share, aiming to raise as much as $49.5 million in its initial public offering. Yesterday, it filed for a withdrawal with the Securities and Exchange Commission.

The company, which helps clients with Web development and advises them on their Internet strategies, in April withdrew an earlier IPO registration with the SEC, postponing the offering because of rocky market conditions. At the time, U.S. markets were getting slammed, and technology stocks shed the most value.

Zefer's latest decision to shelve its IPO comes as the overall Internet consulting sector has taken a beating from Wall Street. Investors have turned pessimistic about the future of most players in the crowded and competitive field.

In the past few weeks, players including iXL Enterprises, Viant and Organic have issued earnings warnings and have since seen their stock plummet to single digits per share. A string of analysts have trimmed their profit forecasts or downgraded stock ratings for many in the group in response to an overall shift in consulting projects.

Given that most Net consultants are continuing to turn their focus away from dot-com projects to longer-term and more lucrative Fortune 500 engagements, analysts have said companies will see slower revenue growth, since projects will take longer to complete.

Zefer, which filed for its IPO in early January, planned to use the funds raised in the offering to repay debt, for working capital and for other corporate purposes, including possible acquisitions. It has done work for clients such as Sara Lee, Kraft, and Burger King.

The company, which won $100 million in a second round of funding in May 1999, has swallowed up a number of smaller firms within the past year in an effort to quickly beef up its core offerings and employee base. Zefer employs roughly 750 people and has offices in Boston, Chicago, London, New York, Pittsburgh and San Francisco.

Zefer is being led by Bill Seibel, who was part of the original management team at systems integrator Cambridge Technology Partners. The company was planning to trade on the Nasdaq under the ticker symbol "ZEFR."

Credit Suisse First Boston and Deutsche Bank Securities were managing the offering.