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CEO expects Excite to break even

As the search engine company's net losses shrink, its chief executive says he's comfortable with analysts' projections it will soon break even.

As Excite (XCIT) watches its net loss shrink, the company's chief executive said he's comfortable with analysts' projections the search engine will break even in the first or second quarter of fiscal 1998.

"I'm comfortable with their consensus of breaking even in the first or second quarter," said George Bell, chief executive. "And if you take an average of that consensus, that would [mean we will] break even in the first month of the second quarter."

Excite, which currently generates revenue through advertising, posted a $7.9 million net loss in its second quarter ending June 30 on revenues of $9.5 million. As the company's revenues have grown, it has shrunk its net loss sequentially for the past three quarters.

The company reported 450 advertisers in its second-quarter results; Bell cited a 25 percent churn rate in general interest, or general rotation, advertising areas. Churn rate describes the rate at which advertisers discontinue their contract after one or two months, with new advertisers filling their absence.

"They discontinue their advertising, evaluate its [success], and then come back to us," Bell said.

He noted the churn rate is smaller among advertisers on its more specialized content pages or those pages that deliver content based on keyword search requests. Companies that follow an advertising-based business model collect revenues based on the thousands of pages they deliver to users .

Excite and other search engine companies may find the volume of pages delivered to users will increase in September, when college students return to college campuses.

"Every September, the students come back," Bell said, "and 25 percent of all Web use comes from universities."

Excite expects to begin collecting transaction-based revenues in November from its new online financial channel, which is slated to roll out this summer.

Under a seven-year deal with Intuit, investment information, stock quotes, service directors, and tracking features will be distributed through the Excite Network and Intuit's Quicken Financial Network. As part of that deal, Intuit received a 19 percent stake in Excite for $40 million.

And last week, Excite rolled out its free email service, which is designed to generate revenues through advertisements.

"The volume of [software downloads] has been pretty robust," Bell said.

The email service is a first for a search engine; it will go head-to-head with such free email providers as Juno, HotMail, and NetAddress.