iXL lays off 850 employees

Atlanta-based iXL Enterprises Inc. has become the latest in a string of Web consulting firms to cut staff in an attempt to become profitable.

In a statement Tuesday, the company said it would lay off 850 employees, or approximately 35 percent of its workforce, in order to cut costs and become profitable by early next year. In September, iXL slashed 350 jobs.

In addition, iXL said it would sell off some of its assets to raise money. The company said it plans to focus on serving its top 75 clients – pared down from 300 – and target three main industries: financial services, travel and retail/consumer packaged goods.

In the statement, the company said the bulk of the layoffs would occur in the offices it plans to close or sell in Berlin and Hamburg in Germany; Denver; Los Angeles; Sao Paolo, Brazil and Tokyo.

“We are creating an extremely focused, tightly run company going forward,” CEO U. Bertram Ellis said in the statement. “Although we are now a much smaller company than we were six months ago, I believe this will make us a much stronger company as a result.”

Preston Dodd, an analyst at Jupiter Research in New York, said the changing Internet landscape is contributing to a longer sales cycle. The demise of dot-coms has reduced the number of potential clients while also taking some pressure off more established companies, which tend to take longer to make decisions, he said.The situation is compounded by the overabundance of Internet consulting firms competing in a shrinking, though still viable business.

IXL isn’t the only Net consulting firm to suffer recently. Tuesday, Internet technology company MarchFirst Inc. said it was lowering its fourth-quarter earnings estimate and restructuring its business to achieve profitability.

In a statement, the company said it projected revenue of US$235 million to $250 million and a loss of 25 to 30 cents per share. The Chicago-based company was expected to earn a profit of seven cents a share, according to a recent survey of analysts by First Call/Thomson Financial in Boston.

MarchFirst also said it will focus on serving its top 500 clients, significantly scaling back its offerings to smaller dot-coms. The company also said it would now target just seven industries including manufacturing, financial services, high tech and telecommunications, consumer products/retail, health care, media, entertainment/communications and transportation/travel and leisure.

Earlier this month, MarchFirst said it would lay off 1,000 employees, or 10 per cent of its staff, to save $100 million.

On Nov. 10, Luminant Worldwide Corp. in Dallas said it was laying off 175 employees, or 18 per cent of its workforce, and would restructure the business to achieve profitability.