The Hits Just Keep on Coming

marchFIRST's bad news continues

February 13, 2001 -- Fresh off its November announcement that it would lay off approximately 1,000 workers, of 10 percent of its workforce, and its January announcement that it would lay off another 550, professional services company marchFIRST has made the February announcement that it suffered $6.8 billion in losses for Q4 2000. Losses were  40 cents per share, worse than analyst estimates of 30 cents per share.

To be fair, the company also took four separate accounting charges for the quarter, and it also announced a go-to-market strategy called the m1 Solution. Also, the big picture isn't quite as bad, as far as losses per share go. For the year, supplemental net loss was $8.0 million or 6 cents per share. Net loss under generally accepted accounting principles was $7.7 billion or $53.27 per share.

We continued to see demand slow throughout the fourth quarter. We believe our clients are committed to their strategic business initiatives, yet concern over the recent economic slowdown has caused them to spend cautiously, said Robert Bernard, marchFIRST chairman and CEO. Clearly market conditions are difficult, but we've taken decisive steps to move the company forward. We believe that the cost reductions we announced recently, combined with the new m1 Solution, will put marchFIRST on track to reach our goals in 2001.

The company took pains to explain the accounting charges, stating that Three of the accounting charges taken in the fourth quarter eliminate from the company's balance sheet assets impaired as a result of the dramatic market shift and economic slowdown, including the dot-com collapse, which adversely affected its clients and industry. The fourth charge is related to the company's recent workforce reductions. The company recorded a charge of approximately $6.5 billion to write off intangible assets, primarily the balance of the goodwill associated with the merger between Whittman-Hart and USWeb/CKS.

Over the past four months, Bernard said, marchFIRST has implemented a number of initiatives designed to control spending and cut costs. (See layoff numbers in the first paragraph, as well as office closures and consolidations.) As a result of ongoing cost-reduction initiatives, Bernard said, the company expects annualized savings of approximately $300 million to $400 million. He added that the company intends to reduce capital expenditures to approximately $15 million in 2001 from approximately $173 million in 2000.