Viant Losses Continue; Acquisition By Divine On Horizon

Viant, an e-services company based here, on Monday reported continued losses for the first quarter of 2002 as it moves forward with plans to be acquired by divine, a Chicago-based B2B software and services company.

Bob Gett, Viant chairman and chief executive officer, told analysts during a brief earnings call that he believes the company may have seen the market bottom in the fourth quarter.

"While there are fewer deals out there, the work we are winning from our existing clients is trending to be larger in size and scope," Gett said.

Viant continues to experience difficult challenges because of the reluctance by companies to spend in the midst of a still uncertain economy, he said.

For the quarter ended March 31, Viant reported a loss of $6 million, or 12 cents per share, on sales of $5.4 million. That compares with a loss, before restructuring charges, of $12.7 million, or 25 cents per share, on sales of $15.1 million for the same quarter last year.

Shares of Viant closed at $1.30 per share, down from Friday's close price of $1.48 cent per share.

Earlier this month, divine said it agreed to buy Viant in an all-stock deal worth an estimated $96 million. Over the past two years, divine, based in Chicago, has acquired more than 30 failing companies, among them e-services firms such as marchFirst and hosting provider Intira.

Gett said the two companies share a common point of view about the market potential of the extended enterprise space. Gett said Viant gives divine the northeast regional presence and "enhances its industry strategy and custom solution development expertise."

"Divine provides a broad spectrum of products and services, plus the scale required for market success," Gett said. "In short, we believe this is a very strategic combination that will create a compelling market force."

The merger agreement is subject to approval by both companies' boards. Viant, an e-services company based in Boston, has struggled along with other once high-flying ebusiness consultants to stay afloat amid the sharp decline in market demand and weakened economy. Mounting losses at Viant have been accompanied by layoffs and office closures. As of March 31, Viant had 181 employees compared with 197 at the end of the fourth quarter of 2001. Billable consultants now total 133.

Looking ahead to the second quarter, Viant officials estimated revenue would range between $4.5 million and $5.5 million and expected a per-share loss of between 9 cents and 12 cents.

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