Earnings Losses Take Their Toll On IT Consulting Firms

Even consulting powerhouses such as McLean, Va.-based KPMG Consulting are seeing little improvement

in sales of IT services. The company's revenue was off 20 percent to $582 million for its third fiscal quarter ended March 31.

"We are all seeing the same thing," said KPMG Consulting CEO Rand Blazer.

While there are widespread reports of an economic turnaround in some industries, "in terms of IT spending within the IT sector, it has not materialized," Blazer said.

Quarter after quarter of losses are taking their toll on some midtier integrators as the market slump moves into its second year.

For example, Boston-based Viant and New York-based Scient, once considered the bellwethers of the e-business solutions market, may have just reported their last quarterly results as independent companies.

Viant, Scient and Chicago-based Lante all posted losses of between $4 million and $6 million for the first three months of 2002, and Viant recently disclosed plans to be acquired by Chicago-based divine in an all-stock deal worth an estimated $96 million.

In its first full quarter since merging with Atlanta-based iXL, Scient said it is also exploring options, including additional mergers.

And Wall Street is paying scant attention to Scient and Viant. First Call/Thomson Financial reported no coverage for either company's most recent quarterly results.

Lante CEO Rudy Puryear, meanwhile, is preaching a path to profitability based on the integrator's investments and alliances tied to the "next generation of Internet technologies."

For his part, KPMG Consulting's Blazer said he still believes services contracts will pick up once companies begin to see an improvement in their own bottom lines. "We'll see that spending return," Blazer said. "It is very clear there is still a strong need based on the discussions we've had" with prospective clients.