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24/7 Media misses expectations, cuts targets

The online advertising company reports a fiscal fourth-quarter net loss of $31.7 million, or 75 cents per share.

    24/7 Media lost far more than expected in the fourth quarter and expects to generate barely half the revenue analysts were forecasting for the next two quarters.

    After market close Wednesday, the online advertising company reported a fiscal fourth-quarter net loss of $31.7 million, or 75 cents per share, excluding special charges and certain non-operating items. Analyst consensus predicted a loss of 50 cents per share for 24/7's fourth quarter ended in December, according to earnings tracking firm First Call.

    Shares of 24/7 traded at 59 cents in after-hours activity on the Island ECN after the release of quarterly results. The company rose 5 cents to 70 cents in regular trading ahead of the report.

    Fourth-quarter revenue increased 4.1 percent year over year to $38.6 million, less than First Call's prediction of $49.7 million. Network revenue was $22 million, technology revenue was $12.5 million, and mail revenue was $4.1 million.

    First-quarter revenue will range from $22 million to $29 million, 24/7 said. Second-quarter revenue will be between $23 million and $30 million, the company predicted.

    First Call consensus predicted overall sales of $52 million and $56 million for the company's first and second quarters, respectively.

    Executives for 24/7 Media blamed their troubles on the dot-com industry's collapse and the U.S. economic downturn. Virtually all companies that rely heavily on Internet advertising have had to lower their growth expectations recently.

    "No one could have anticipated the enormous challenges the Internet advertising industry has faced in the past year," CEO David Moore said during an abbreviated conference call with analysts. "The demise of many Internet companies was unexpected, and the adoption of the online advertising medium by traditional advertisers has taken longer to materialize than we hoped."

    24/7, which ended 2000 with $28.9 million in cash and $9.4 million in investments in publicly traded companies, needs more financing to survive until the business reaches breakeven, Moore said. The company recently secured a credit line that lets it borrow up to $50 million over the next two years, but the actual amount loaned depends on 24/7's stock price and trading volume.

    The company is looking for other sources to borrow money from, Moore said.

    Company executives did not have the question-and-answer session that typically is part of a publicly traded company's quarterly conference call with analysts. Ongoing negotiations with financiers prohibit executives from taking questions, the company said.