The Future of BearingPoint looks dark

The consulting business requires a fair amount of upfront cash. The consulting firm delivers service and pays its employees right away. But the revenue from that work doesn't show up for at least 30-40 days. In the meantime, the firm has delivered two, maybe three, paychecks. As credit lines expire, I believe we're going to see more evidence that the credit crisis is causing widespread damage.

The following is taken from an article posted last week on Yahoo! Finance.

BearingPoint. (BGPT (OTC); about 16,000 employees). This Virginia-based consulting firm, spun out of KPMG in 2001, is struggling to solve its own operating problems. The firm has consistently lost money, revenue has been falling, and management stopped issuing earnings guidance in 2008. Stable government contracts generate about 30 percent of the firm's business, but the firm may sell other divisions to help pay off debt. With a key interest payment due in April, management needs to hustle - or devise its own exit strategy.

I see this as an opportunity for smaller firms, which do not have the same overhead and legacy cost structure. Roig Consulting has no debt and is well positioned to meet customer needs for a very long time. I would imagine that other small, specialized firms are in a similar position.