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Interactive-TV company Liberate narrows losses

The company, which is beginning to elbow in on Microsoft's territory in set-top boxes, posts a loss that easily beats Wall Street estimates.

Liberate Technologies, which makes interactive-TV software, easily beat Wall Street expectations today when it posted a narrowed loss of 9 cents per share, excluding acquisition charges.

Analysts polled by First Call/Thomson Financial expected a consensus loss of 21 cents per share.

After the market's close, Liberate reported a loss of $9 million on revenues of $9.4 million for its fiscal first quarter, excluding charges, compared with a loss of $10.1 million, or 14 cents per share, on revenues of $5.3 million, for the same period last year.

Including charges, the company lost $88.2 million, or 90 cents a share, compared with $12.5 million, or 45 cents a share, last year.

AT&T confirmed today that it would begin testing Liberate's software on AT&T's cable set-top boxes, a blow to competitor Microsoft, which has an existing agreement and $5 billion investment in AT&T. Liberate recently won a similar contract with Microsoft partner and European cable giant United Pan-Europe Communications.

"We hope you dialed in on AT&T today. We love those guys today," CEO Mitchell Kertzman told investors on the conference call following the earnings announcement.

During the quarter, Liberate completed its acquisition of MoreCom, an interactive-TV infrastructure company. It also announced an investment of $3 million in Everypath, an application service provider for Internet appliances.

Other highlights of the quarter included a deal with AOLTV, which is initially using Liberate's software exclusively. Liberate also a signed deal this quarter with BellSouth.

"This is as good as it gets...in terms of both financial results and the qualitative nature of our business underneath those results," Kertzman said in the conference call.

Deferred revenues were $64.2 million for the quarter ended Aug. 31, down $4.9 million from the previous quarter.

"We continue to believe that Liberate is executing its plan to secure design wins with leading network operators and then begin an aggressive deployment of set-top boxes," Gene Munster, an analyst with U.S. Bancorp Piper Jaffray, said in a note to investors today. Munster expected a loss of 14 cents per share.

Munster believes that Liberate has enough cash on hand to fund growth for the next nine quarters. Kertzman said today that Liberate has a burn rate of about $25 million per quarter. In July, networking-equipment maker Cisco Systems invested $100 million in the company.