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Three Shops Make Staff Cuts

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Citing a continued softness in the technology sector that is expected to linger for the foreseeable future, three shops have initiated cutbacks.

Modem Media, Norwalk, Conn., said on Thursday that it is closing three offices and cutting 90 staffers to adjust to a downgraded revenue prediction for 2002. The move came shortly after Interpublic Group public relations shop Weber Shandwick, Cambridge, Mass., dismissed 14 employees and The Screen House, a Boston i-shop, cut five people.

At Modem, the layoffs represent roughly a quarter of the company's global workforce, with the majority of cuts to come from the closure of offices in Toronto, Munich and Hong Kong in the third quarter.

"It's a function of the small markets," said Modem Media CFO Frank Connolly. "The dollars spent are smaller, too. [The clients] aren't spending at the levels that could sustain those offices."

The moves are "about staying healthy and being ready to grow when the business increases," said Connolly. "It doesn't diminish our prospects with our core clients," in San Francisco, Norwalk, and London.

The company anticipates second- quarter pretax charges of about $12 million, as well as $4 million in pretax savings for the balance of the year. Modem revised its 2002 revenue outlook to $70-75 million, about $10-15 million less than previously forecast.

Paul Twitchell, director of business development at The Screen House, said the cuts were precipitated by a "slowness for new projects to get started."