Excite posted a loss of $6.8 million, or 14 cents a share, for the quarter, compared with a loss of $8.2 million, or 27 cents a share, a year ago.
But on a pro forma basis that excludes acquisition-related costs, Excite posted a net profit of $1.3 million, or 2 cents a share, its first quarterly profit. Wall Street had expected the company to post a loss of 2 cents a share, according to First Call.
Excite noted, however, that it will incur a charge of $7.6 million, or 14 cents a share, for every quarter over the next two years, as it amortizes the cost of its content-sharing deal with Netscape. Excite, after discussions with the Securities and Exchange Commission, decided to spread out the charges from its $56.8 million upfront cash payment to Netscape, which it had written off in the previous quarter.
The quarter also marked the public's first look into traffic numbers after Excite's content and traffic sharing deal with Netcenter.
Analysts, though, have yet to witness any earth-shattering boosts in traffic numbers. Daily page views between the second and third quarters this year increased by a margin of only 16 million, from 43.7 million views per day to 50 million.
As a result, the Netscape charge raised concerns among some analysts over the practicality of inking the deal in the first place.
"[Excite] is not getting the traffic they thought would be getting from Netcenter," said Andrea William, an analyst at Volpe Brown Whelen.
Though Williams said it was still too early to pass judgment over whether the deal was a flop, she added that the quarterly charges over the next two years will become "an incremental negative" in the eyes of financial analysts.
Most agree that the future viability of the Netcenter deal most likely will not make or break Excite.
"If [Netcenter] under-delivers [their] numbers, it probably won't be a good deal for Excite, but it's not critical to what they're doing," said Bruce Smith, an analyst at Jefferies & Company. "The only upside is if [Netcenter] over-delivers. But if they don't, it's really not a major issue."
Meanwhile, Excite's revenues for the quarter jumped to $44 million, nearly tripling from $16 million over the same period a year ago.
"We are pleased with the strong revenue and bookings growth this quarter and especially proud of achieving profitability on a pro forma basis," said George Bell, Excite chief executive, in a statement. "Achieving break-even cash flow from operations for the first time was an even more important financial milestone."
Nevertheless, Excite remains entrenched in a heated battle with a slew of competitors, including the long-awaited entry of corporate heavyweights Microsoft and Disney, and the traditional leaders of the pack Yahoo and America Online.
Likewise, Lycos, one of its traditional competitors, has also shown significant gains in audience since completing acquisitions of Tripod, Angelfire, and WhoWhere. And it may leapfrog ahead of Excite after the close of its acquisition of Wired Digital, which it announced last week.