Breakaway Solutions trims loss, sales climb
The Internet services firm reports a narrower-than-expected fourth-quarter loss and said sales from its application hosting and consulting services soared.
Operating loss for the period was $2.6 million, or 15 cents per share, on revenues of $10.6 million. That compares with a net loss of $767,000, or 10 cents per share, on revenues of $2.4 million in the same period in 1998.
Analysts expected the Boston-based firm to post a loss of 17 cents per share, according to a survey by First Call.
Despite the smaller-than-expected loss, Breakaway shares were hit hard in early morning trading. The stock was down $14, or 12 percent, to $107, breaking its bullish run. Since its $250 million acquisition of Eggrock Partners, an electronic e-business technology firm, Breakaway's stock had been enjoying a positive ride, trading as high as the mid-$120 to $130 range.
"Their earnings performance was very strong, but the stock had just run up a lot very fast and very far in the last month," said Randall Mehl, a financial analyst at Robert W. Baird.
Mehl added that despite better-than-expected fourth-quarter results, Breakaway's stock is due for a rest following an 80 percent stock increase in just the last month. Mehl currently rates Breakaway's stock with a long-term "market perform."
Breakaway, which is focused on providing mid-sized businesses strategy consulting, systems integration and application hosting, attributed its strong quarterly sales partly to the addition of 27 new clients, the launch of 16 clients' e-businesses and sales derived from recurring revenues from application hosting services.
Chief financial officer Kevin Comerford said the company expects to turn a profit by the last quarter of 2000.
During the quarter, the upstart led by former executive and cofounder of Cambridge Technology Partners Gordon Brooks, went public and more than tripled on its first day of trading. Breakaway opened at $61 in its initial public offering (IPO) after it priced at $14 per share.
Also in the quarter, Breakaway said it grew its employee base to about 323 workers and added its eleventh application hosting data center in Chicago, Ill. Breakaway said it currently has six U.S.-based data centers and the rest are overseas in Europe, Asia and Australia.