Reeling from the slowdown in technology spending, e-services firms such as Razorfish and MarchFirst could use some consultants themselves-their stocks keep hitting new lows. When the dust settles, another of the companies, Sapient, is likely to be one of the industry's few survivors.

Analysts say Cambridge, Mass.-based Sapient, with a market value topping $1 billion and sizable profits, has been wrongly lumped together with smaller, less tech-focused firms that planted stakes doing mostly banner ads and Website development. Sapient's strengths, though, have always been in back-end systems development, something the so-called interactive advertising agencies are now struggling to deliver.

Adding to the possible confusion was Sapient's early March news that it would report a disappointing first quarter and that it was cutting 20 percent of its staff. It sounded like similar cutbacks at Razorfish and For such a worker-driven company, it was "not good news," says Terrence Tierney, a senior research analyst for U.S. Bancorp Piper Jaffray.

As its smaller competitors fall away, however, Sapient's uniqueness and viability will become clear to investors.

More than ads. Sapient has always differed from its rivals. While the smaller shops were servicing dot-com startups spawned during the past few years' Internet boom, Sapient focused on larger, more traditional companies. Its clients, including American Airlines and McDonald's, demanded more sophisticated-and more expensive-systems integration expertise.

Unlike the smaller firms, Sapient is not dependent on advertising spending. In fact, the firm doesn't generally take on banner-ad-only projects, typically paid for through clients' advertising budgets.

A relative dinosaur among its competitors, the company, founded in 1991, has been publicly traded for four years. Over the years, Sapient has taken on increasingly complex projects-for example, revamping United Airlines' entire Web operations, including transactions and reservations. Its global presence and ability to handle pan-European projects are another feather in its cap. Sapient's primary competitors include traditional tech services firms such as IBM, EDS, and Accenture.

And its operating profit margins of 15 to 20 percent are among the highest in the industry, says Greg Gould, an analyst with Goldman Sachs, which has done underwriting for Sapient. Sapient operates more effectively than its peers, he says.

Rough road. Sapient has not been immune to investor uncertainty in the sector, however, as its stock rose above $74 last August only to plunge to about $11 in March. Analysts argue Sapient's continued success hinges on employee retention; that's why the cutting of 720 jobs was dramatic. The layoffs were unprecedented at Sapient and showed "the depth of just how bad the IT services sector is right now," Tierney says.

Sapient can recover from the blow, Tierney contends, but not until 2002, which is later than analysts' earlier projections. "For the stock to start recovering, the business will have to start recovering, which means tech spending will have to increase, and that's contingent on an economic recovery."

Sapient must hunker down and wait for the economy to improve. At the end of last year, the company had $280.6 million in cash and short-term investments. "They've got the right business model, financial controls, and culture, so they just need to hold onto those to be the preeminent player when the market turns around," Gould says.