Scient’s Final Curtain Call

Scient, the once formidable Web integrator that in many ways epitomized the brash confidence and euphoria of the dot-com-driven professional services market, only to be cast down to the bottom of the services heap amid the IT spending slowdown, has finally taken its last breaths.

The struggling New York-based firm announced this week that it has filed for Chapter 11 bankruptcy protection and has signed an agreement to be purchased by Salt Lake City-based professional services firm SBI and Company.

The assets to be purchased by SBI include employees from the United States and the United Kingdom, client relationships and some vertical practices.

Scient's dramatic rise and even more dramatic fall from grace has been well-documented throughout the industry. While the company rode the wave of e-business services to fast growth and a stock price of more than $150 a share in 2000 (despite rarely posting a profit), the crash of dot-com spending that followed, not to mention the economic slowdown in general, brought the company back down quickly. Poor sales and negative earnings continued to plague the company through much of 2001, and more recently, the company merged with fellow Web services firm iXL in an effort to strengthen its business. But it appears even that drastic move, as well as an infusion of cash in the way of a $9 million term loan in April, did little to stop the downslide.

There had been rumors in recent weeks that the company was on the verge of filing Chapter 11. The companies confirmed those rumors Wednesday, with an announcement that Scient has filed a voluntary petition with the U.S. Bankruptcy Court in New York for Chapter 11 protection. SBI says it will provide to Scient debtor-in-possession financing of up to $4.9 million pending the completion of the asset purchase.

The purchase of Scient's assets is the latest in a series of aggressive post-dot-com acquisitions by SBI, which previously scooped up assets of MarchFirst, Emerald Solutions and other companies. The company said it has been in discussions with Scient executives about the potential merger since the beginning of the year.

President and CEO Ned Stringham said in a statement that the moves are part of SBI's long-term strategy to build its business based on vertical expertise in areas like manufacturing, retail, transportation, telecommunications, financial services and consumer packaged goods, as well as core offerings like business assessment, business process optimization, enterprise application deployment and integration, supply chain management, customer collaboration, user experience, branding, visual design, technical architecture design and onsite/offsite/offshore application development. What's more, the addition of Scient's UK practice will give SBI its first real presence in the European market.

"To stay competitive you've got to be dynamic, and to be dynamic you've got to keep changing and growing," says Coleman Barney, managing director of customer collaboration for SBI. "We are very attuned to what is going on in the marketplace, and this is just one more example of how we think we've found some great capability, some great people and some fantastic client relationships with delivered work."

Barney says there are about seven or eight strong customer relationships that Scient had that will become part of SBI's portfolio of clients.

"Within each relationship probably depending on the size, there are between two and four different engagements," he says. "That represented about 80 percent of the go-forward revenue for Scient."

Like the MarchFirst and Emerald Solutions transactions, SBI expects the Scient acquisition to be profitable in its first quarter of operations, which Barney estimates will happen in about three months, pending bankruptcy court approval. Once finalized, Scient will no longer exist as a separate entity.