Thursday, October 19, 2000

Stock Focus: Internet Consulting Companies

NEW YORK - It has been a rough couple of months for stocks of Internet consulting companies. Former stars like Razorfish now trade at a fraction of their 52-week highs.

"The fourth quarter is not going to be an easy one for this group of stocks either," warns Steven Birer, senior e-services analyst at Robertson Stephens.

Robert St. Jean, Internet and information technology services analyst at J.P. Morgan, points to several sector difficulties, including a drop-off in information technology spending by both dot-com and legacy companies, heavy staff turnover brought on by underwater stock options, and pressure to reduce fees. "When that sense of urgency goes away," St. Jean notes," clients tend to be a little more price sensitive."

St. Jean thinks that the industry's problems are short term in nature and will be offset by new demands, notably the development and implementation of wireless technologies.

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