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Dot.com failures hit e-services companies

Lante Corp is the latest e-services consultant to report big financial losses.

The failure of dot.com companies is starting to impact the 'e-services' companies that have sprung up around them. Lante Corp is the latest consulting firm to be hurt by dot.com clients that ran out of cash.

The company said it expects to post a $6 million to $7 million loss when results for its latest quarter are announced. $1.7 million of that loss is expected to come from companies that couldn't pay their bills.

Lante CEO and president Rudy Puryear says revenue for the three months ended Sept. 30 will be 12% to 15% less than the $23.6 million it generated in the previous quarter. That's still more than double the firm's $9.3 million in revenue for the third quarter of 1999, but Lante's warning is further confirmation that the market for e-services is not growing as rapidly as it was even six months ago.

Despite rosy industry projections (Forrester Research predicts E-services will grow from $19.6 billion this year to $64.8 billion by 2003) e-services firms such as IXL Enterprises, Viant, and Xpedior warned the market last month that they would see a decline in third quarter revenue. Market values have fallen as well: Lante shares have dropped from $83 in March to about $4.

"Really, there was just a bubble of easy money for startups," says David Sturtz, a research analyst with Credit Suisse First Boston. Now the bubble has burst.

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