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Razorfish edges estimates
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May 3, 2001: 4:56 p.m. ET
Internet consulant's loss narrows; co-founders step down
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NEW YORK (CNNfn) - Internet consulting firm Razorfish reported a first-quarter loss Thursday that was slightly narrower than analysts had expected and said Jean-Philippe Maheu, formerly chief operating officer, has been promoted to chief executive.
Excluding extraordinary charges, the company said it lost $6.6 million, or 7 cents per share, during the quarter ended March 31. That compares with an operating profit of 7 cents per share during the same quarter last year and is a penny less than the 8 cents per share analysts polled by earnings tracker First Call had expected the company to lose.
At $42.7 million, Razorfish's first-quarter revenue fell 33 percent from the $64.1 million it reported during last year's first quarter.
"Our primary goal is to manage our return to profitable operations and positive cash flow while successfully serving the expectations of
our clients, shareholders and employees," Maheu said in a statement.
"These financial results reflect this direction," Maheu added. "We continue to gain traction with new and current clients, including Cisco, Ford, and Natwest and we are beginning to see the benefits of our cost reduction efforts."
Maheu is replacing former CEO Jeff Dachis, the company's co-founder.
The New York City-based firm also said that company co-founder Craig Kanarick has stepped down from his role as chief strategic officer. Dachis and Kanarick will remain co-chairmen of Razorfish's board of directors.
Dachis and Kanarick, friends since boyhood, were both 28 when they founded Razorfish in 1995. Over the next few years, the company became emblematic of the brashness and imagination that characterized a wave of Internet-related ventures.
The soaring stock market made both men into multimillionaires, at least on paper. But the price of Razorfish's stock has plummeted more than 94 percent in the past year from a high of $23.62.
Shares of Razorfish (RAZF: Research, Estimates) fell 39 cents to $1.22 on Nasdaq amid a broad downturn in technology stocks ahead of the news of the earnings results and resignations of the co-founders. That decline came after the New York Times reported on its Web site earlier in the day that such an announcement was imminent, citing unnamed company sources.
Razorfish, which provides a range of services, including strategic consulting, Web design, and integration with enterprise resource planning and legacy systems, has been stung hard by the stalling U.S. economy and its subsequent impact on information technology spending by corporations.
As have most of its counterparts in the Internet consultancy business, Razorfish has implemented a range of cost-cutting measures. In February, the company announced plans to cut 27 percent of its global work force as part of a broader cost-cutting plan aimed at saving about $70 million in 2001.
The company also has closed several of its offices. Other Internet consulting firms, such as Viant, Scient, Breakaway Solutions and IXL Enterprises, have taken similar steps as well.
MarchFIRST, for example, filed for liquidation of the company on Monday after filing for bankruptcy reorganization in April.
-- from staff and wire reports 
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