The person, who declined to be identified, also said that Divine Inc., a Chicago software company, is considering whether to buy the Midwestern assets of MarchFirst, a Chicago Internet-consulting and Web-design company.
Those assets include the former Whittman-Hart Inc., which bought San Francisco-based USWeb/CKS Inc. in a stock deal valued at $5.7 billion when it was announced in December 1999; the merged company was renamed MarchFirst. Francisco Partners, a San Francisco investment firm, paid $150 million for a controlling 32% stake in MarchFirst in December 2000.
Neither MarchFirst nor Divine would comment.
Shares of MarchFirst plunged to a handful of pennies after the New York Times reported the Chicago-based company would lay off half its work force, or about 3,500 employees, by the end of this week, and the Chicago Tribune reported Francisco Partners is trying to salvage its investment by selling assets.
MarchFirst is racing against the clock; a $53 million debt due to Bank One Corp.'s American National Bank earlier this month was extended a month to April 16.
At 4 p.m. Tuesday, MarchFirst shares were down 11 cents to 16 cents on the Nasdaq Stock Market. The shares traded above $40 a year ago.
"People who trade the stock are trying to tell you that this is a company that is potentially flirting with bankruptcy and the stock could be worth zero," said Karen Ficker, an analyst at ING Baring Furman Selz. "People are just abandoning the stock at any price."
MarchFirst had a loss of $73.2 million, or 40 cents a share, on revenue of $213.5 million, in the fourth quarter, excluding one-time charges. Analysts surveyed by Thomson Financial/First Call expect a loss of 31 cents a share in the first quarter, compared with net income of 17 cents a share a year earlier.
MarchFirst is far from the only victim of a drastic drop in demand for Internet consulting and services. Rivals Scient Corp., Sapient Corp. and Computer Sciences Corp. have all seen their results squeezed. Viant Corp., an Internet consulting company based in Boston, warned Tuesday of lower-than-expected first-quarter earnings and said it would lay off 211 employees, or 38% of its work force.
Viant, which is closing offices in Houston, San Francisco and Munich, said it expects to report a loss of 33 cents to 36 cents a share on revenue of $14 million to $16 million before restructuring charges of $13 million to $17 million. Viant was unchanged at $2.44 on Nasdaq.
Dan Golden contributed to this article