Scient Stays Positive Amid Continued Losses, Possible Nasdaq Delisting

Scient

Formant outlined a business plan focused on growth, but that hinges upon getting over several hurdles, including a possible delisting from Nasdaq, pending approval of a reverse stock split, and pending approval of a loan to address continued cash-flow troubles.

"We are poised to be the great company in the e-services space," Formant said during a conference call to discuss the company's financial results. "That position is up for grabs, and we are going for it."

For the quarter ended Dec. 31, Scient reported a loss of $55 million on combined sales of $20 million. That compares with a loss of $274 million on sales of $132 million for the same period in 2000.

The company did not provide an accompanying balance sheet or per-share results. Scient also did not immediately respond to CRN requests for the information.

The results that were disclosed reflect the business of Scient Inc. as if Scient and iXL Enterprises had been combined for the quarter. The two companies merged on Nov. 7.

The results also included a restructuring and merger-related charge of $20 million. Head count at the end of the fourth quarter was 729, but with staff reductions still to be carried out this quarter, Scient said the company expects its head count at the end of March to be about 550, of which 460 are anticipated to be consultants.

The merger of Scient with Atlanta-based iXL was designed to foster financial stability and create a stronger e-business solution provider with complementary business strengths and technical skills. Before the merger, both companies--once considered high-fliers in the e-services market--had reported millions in losses, laid off hundreds of employees and consolidated offices to cut costs amid a sharp decline in market demand and a slowing economy.

Formant Wednesday morning characterized the restructuring and cost cutting, including layoffs, office closures and consolidation, as "behind us."

Scient CFO Jacques Tortoroli briefly mentioned the company recently being placed on notice by Nasdaq due to its inability to meet the $1-per-share minimum bid price required during a 30 consecutive day trading period.

Scient closed trading on Tuesday at 13 cents per share. The company's 52-week high is 49 cents per share, and its 52-week low is 10 cents. Scient shares were trading up slightly, at 19 cents, shortly after the release of the financial results Wednesday.

"We have no control over the price of our stock," said Tortoroli. But he said the company is addressing the overall issue with plans to present a reverse stock split resolution, recently approved by the board, to stockholders during the second quarter.

The move, he said, is aimed primarily at eliminating the stigma that "low price equals low quality" more than a desire to remain listed on Nasdaq, which he characterized as a "desired outcome, not a motivation."

According to Nasdaq's Market Place rules, the New York-based company has 90 days--or until May 15--to regain compliance. Scient faces the possibility of being delisted from the exchange if it can't comply with the minimum bid price requirements by that deadline.

The company also disclosed it is seeking a loan to address a "liquidity issue," attributed to merger-related expenses and a decline in revenue. As of Dec. 31, Scient reported $62 million in cash, of which $41 million was listed as "restricted."