Net loss for the period was $17.3 million, or 28 cents per share, on revenues of $145 million. That compares with a profit of $16.3 million, or 26 cents per share, on revenues of $160.2 million in the same period in 1998.
Analysts expected the Cambridge, Mass.-based professional services firm to post a loss of 30 cents per share, according to a survey by First Call.
The company said it expects to continue its loss position in the first half of the year, partly based on flat revenues compared to the year-earlier period and partly due to the company's need to fund its growth in Internet services.
For most of last year, Cambridge, along with its rivals Electronic Data Systems, Computer Sciences, IBM Global Services and the Big Five consulting firms, began to revamp its focus and strategy based on an overall shift in the services market. The larger services firms began to feel competitive pressure from smaller Internet firms that were nabbing more deals--and Wall Street's favor--as companies increasingly move their businesses online.
Once a Wall Street darling itself, Cambridge struggled with a reorganization, executive turnover, plummeting stock price and revenue shortfalls for most of last year.
While the company projects revenues to be flat for the first half of this year, it also said it expects continued growth in its e-business revenues.
The company said it experienced strong demand for its e-business services in 1999, which represented about $243.3 million, or 39 percent, of its total revenues. That compares to $190.9 million, or 31 percent, in the year prior. Cambridge said total revenues for 1999 reached $628.1 million, vs. $612 million for the same period a year ago.
For 2000, Cambridge plans to move forward with its e-business strategy by focusing on client work that involves providing Internet services such as Web strategy and development, the company said in a statement.
Cambridge also plans to invest $20 million in training and career development as well as internal operations. Additionally, the company said it will continue to rebuild its executive management team.
Earlier this week, the company named John Gavin as its new chief financial officer. Gavin, 44, replaces former CFO and longtime executive Arthur Toscanini, who left Cambridge last November to pursue other interests.
Dell Computer is offering up its Internet business know-how to companies looking to establish business-to-business e-commerce initiatives in their own industries.
The computer giant yesterday said it has teamed with empactHealth.com, an online purchasing, or e-procurement, service provider for the healthcare industry, to provide consulting on e-commerce network development, technical support and hardware to run the company's online purchasing services. Terms of the deal were not disclosed.
In the past several months, Dell has made similar deals to help some of its traditional corporate customers in the healthcare industry, along with other industries looking to establish an online purchasing system.
"Many customers have asked us 'how do you do what you do, and how can you help us do the same?' " said Rob Crawley, a spokesman for the preferred accounts division of Dell. "(Business-to-business e-commerce) is what we're going to get into seriously this year."
Although not as glamorous as the business-to-consumer (B2C) market--the world of well-known names such as Yahoo, Amazon.com, eBay and America Online--the business-to-business market is expected to garner a much larger share of revenue generated through e-commerce.
Along with the healthcare industry, business-to-business marketplaces also are sprouting up in such fields as chemicals, automobiles, manufacturing, construction and pharmaceuticals. General Motors, Ford, Dupont and Chevron are among the larger corporations that have recently announced plans to build or participate in electronic marketplaces. They have partnered with such companies as Ariba and Commerce One, which make software that lets users buy and sell everything from office equipment to services online.
Shares in firms providing services and technology for business-to-business markets have soared in recent months. That's due in part to analysts who expect the market for commercial transactions to grow to $5 trillion by 2002.
The healthcare industry has seen much attention recently from business-to-business players. For example, in December, e-commerce company Chemdex said that it was set to acquire SpecialtyMD.com, a maker of software for delivering information about medical products and procedures, in an all-stock purchase valued at $115 million.
Chemdex in December also said that it and Tenet Healthcare, an operator of hospitals, have formed a new company to provide business-to-business e-commerce services to the healthcare industry. The companies will combine their healthcare and e-commerce expertise, existing buyer and supplier contracts, and key technology assets to provide services to the high-volume medical and related supplies market.
In addition, SAP in December teamed with Neoforma.com to launch an online healthcare marketplace. The German software giant said Neoforma.com, an online business-to-business healthcare services provider, will use SAP's mySAP.com marketplace to create a global exchange for the healthcare industry.
"empactHealth has their work cut out for them," said Pierre Mitchell, an analyst with AMR Research. "It's a very fragmented market with a lot of players. It's going to be hard to get established in the market." Online auctioneer eBay planted yet another flag in Asia today, announcing a joint venture with NEC to market its trading services in Japan.
NEC, a computer and communications company, will take an undisclosed equity stake in eBay Japan and plans to promote the site through its Internet service provider, personal computer products and offline marketing.
Asia is quickly becoming a hot spot for American e-commerce companies who are eyeing the region's expanding middle class. While conducting business in the area is not without its drawbacks--including inefficient payment methods, high Internet access costs, and delivery and technology infrastructure problems--companies are expanding to Asia at a furious pace.
Just last month, eBay teamed up with China.com, which will market eBay's new Chinatown auction service to Asian online customers. Priceline.com, the site that allows customers to name their own price for products and services, also recently said it was teaming up with Hong Kong-based Hutchison Whampoa to launch a "name your price" Web site in Asia. Not to be outdone, rival Amazon.com took a $5 million stake in Greg Manning Auctions, an online auctioneer with a presence in China.
The eBay Japan Web site is expected to launch within the next few weeks, the company said. The new site will be completely in Japanese, with support for trading in yen and specific Japanese category listings.
"We believe that teaming up with NEC will provide eBay Japan with the exposure and marketing support to make it an e-commerce leader in Asia," Meg Whitman, eBay's chief executive, said in a statement.
Merle Okawara, who was previously the chairman and president of JC Foods, will head the new company.
While Internet usage is still far from widespread in Asia because of access costs and infrastructure problems, it is expected to surge in the region, reaching about 12 percent of the population, or nearly 374 million people, by the end of 2005, according to consulting firm the Yankee Group.
Market research firm International Data Corp. forecasts that the Asia-Pacific region, excluding Japan, will have about 21.8 million people connected to the Net spending a total of $2.2 billion by the year's end.
Internet portal AltaVista, which is planning an initial public offering, warned potential investors that a securities law may thwart its sale to another company after the IPO.
The company said majority owner CMGI, which operates a network of Internet companies, may hold on to its majority stake to avoid being tagged as an investment or mutual fund company by the Securities and Exchange Commission. The warning was in the standard "risk factors" section of the filing, which outlines every possible detrimental scenario that could face a company's future.
"CMGI's interests could conflict with the interests of our other stockholders," AltaVista said in its S-1/A filing with the SEC. "CMGI may be motivated to maintain at least a majority ownership position in AltaVista, even if other stockholders of AltaVista might consider a sale of control of AltaVista to be in their best interests."
In the not-so-distant past, owning stock in a profitable publicly traded company over the long haul was considered a wise investment strategy, but in today's market environment, companies that are likely to be acquired are considered strong investments as takeover speculation fuels their stock prices even higher.
The securities law--the Investment Company Act of 1940--states that a company whose investments make up 40 percent of its total assets is for all purposes an investment company. When CMGI first considered acquiring AltaVista from Compaq Computer last summer, sources said it was looking for major acquisitions to avoid being tagged as a mutual fund.
If CMGI allowed a suitor to acquire AltaVista after the IPO, it risks approaching the 40 percent level. The company will hold about 73.8 percent of AltaVista after the IPO.
CMGI's possible reluctance to shed its stake does not bode well for investors.
AltaVista's filing with the SEC adds that CMGI's ownership "may have the effect of delaying, deferring or preventing a change in control of our company or discouraging a potential acquirer" from making any moves that "in turn could adversely affect the market price of our common stock."
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