Scient cuts 460 jobs in restructuring

In another setback for the Web services industry, Scient said
Wednesday it cut about 460 jobs in a restructuring effort to lower
costs.

The layoffs, which were effective immediately, amounted to about 25 percent
of Scient's staff. In addition, company executives said Scient plans to
close its offices in Silicon Valley and in Austin, Texas.

The San Francisco-based company also lowered its earnings expectations and
revenue expectations for the third quarter, "given the rapid change in the
e-business market," the company said in a statement. Scient attributed the
cutbacks and revenue shortfall to a wider economic slowdown causing
shrinking budgets at dot-com companies and increased competition in the
services market.

"The combined effect of these market factors has required swift, corrective
action," chief executive Bob Howe said in a statement.

"We believe the actions we are taking will better align our capacity with
current market demand," he said. "While we continue to manage through the
market transition, we believe the long-term e-business opportunity is very
attractive."

The layoffs at Scient are the latest to hit a company in the Internet
services industry. Tuesday, Web consultancy Xpedior announced plans to close several
offices and trim nearly 32 percent of its staff. Last week, iXL Enterprises
said it would lay off about 850
employees, close or sell seven offices, and liquidate selected assets to
turn around its ailing business.

Others in the industry, like MarchFirst and Razorfish, have also been hit by
investor ennui and deflating demand for Internet business services.

Scient's shares have lost nearly 95 percent of their value this year. They
are trading near their 52-week low of $4, well off a high of $133.75 reached
earlier in the year.

The company now estimates its third-quarter revenue will be $80 million, with
professional services margins about 50 percent, Scient said. Prior analyst
projections were about $112 million. Scient, which now employs about 1,400
people, is projecting a pro forma operating loss of about $13 million, or 16
cents a share, before one-time restructuring charges of between $40 million
and $45 million.

"The actions we are taking to reduce our costs are expected to generate
savings of approximately $60 million in calendar year 2001," chief financial
officer Bill Kurtz said in a statement.

"Our financial position remains strong and our cash balance should
approximate $150 million at the end of the December quarter. We remain
committed to our goals of generating positive operating cash flow in fiscal
year 2002 and long term operating margins in the 15 percent to 20 percent
range."