Razorfish scales back, lays off 400

Internet consulting firm Razorfish today laid off 400 employees, or more than 20% of its staff, as the New York-based company implemented the latest phase of a cost-cutting program designed to save $70 million this year alone.

The job cuts are accompanied by a reorganization of the 1,900-person company that will consolidate accounting, human resources and information services functions at the regional level. Razorfish will also cut expenses in travel, recruiting, facilities and marketing, the company said in a statement.

"We have initiated several important changes that will allow us to better serve our clients, increase our revenues and quickly return us to the profitability that has defined our business for over five years," said CEO Jeff Dachis in a statement.

The Razorfish layoffs are part of a slew of staff reductions throughout the new economy that have affected some of the most venerated Internet names, including bellwether Amazon.com Inc. A total of 15,448 Internet workers at 120 companies were shown the door in January -- mostly to achieve profitability -- according to TheStandard.com's Layoff Tracker.

Razorfish advises Internet-based and traditional companies on how to best use the Internet and new media for their businesses.

"They said, 'Come back tomorrow and we'll start anew,' " said a project manager at Razorfish's New York office. "I almost would have liked to have been laid off."

Company officials didn't respond immediately to requests for comment.

The layoffs were not unexpected. Wall Street analysts have been clamoring for the company to slim its staff since December, and on Jan. 16 -- despite a pledge not to let anyone go -- management informed employees at all of the company's worldwide offices that cuts were imminent.

"I'm sorry to hear that people are going to lose their jobs, but I think it's what the company needs to stay afloat," Steven Birer, an analyst at San Francisco-based Robertson Stephens, said in late January after news of the planned layoffs were leaked from the company.

Recently, Razorfish, one of the first Web consulting firms, had disappointed investors. In mid-December, the company warned it would miss its expected fourth-quarter earnings, which are to be announced Thursday after trading closes. About only 40% of its consultants were on paying assignments.

In addition to the cost-saving measures, Razorfish will implement new incentive and compensation plans.

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