CompuServe losses widen
The online service reports a wider fourth-quarter loss than expected as revenues continue to lag.
The struggling online service reported a net loss of $18 million, or 19 cents a share, for the quarter ending April 30, compared with a loss of $1.1 million or 2 cents a share a year ago. The loss was in part due to an after-tax charge of $5.8 million for consolidating facilities and write-downs for some equity investments.
But even without the charge, CompuServe had a loss of 13 cents a share. Wall Street had been expecting the company to post a loss of 9 cents a share, according to First Call.
Revenues for the quarter fell to $208 million, down 3.4 percent from $215.2 million a year ago.
The revenue slump was attributed to a drop in U.S. subscribers for its CompuServe online and Internet services. Company representatives cited reduced marketing efforts as contributing to the subscriber loss.
CompuServe plans to reshape its marketing programs to target U.S. businesses, professionals, and technical customers. To do so, it ramped up its direct marketing efforts last month, according Frank Salizzoni, chairman and acting chief executive. The company also plans a national advertising campaign later this month.
Revenues from the interactive services fell to $132.6 million in the quarter, down 13.2 percent from a year ago. Global subscribers of the interactive online service declined to 2.8 million at the end of the quarter, compared with 3.2 million subscribers a year ago as the company cut back on its acquisitions of these members.
But its network services business improved its revenues for the quarter. The company grew revenues 27 percent to $69.5 million for the quarter, up from $54.9 million a year ago.
The company's revenues have been flat for more than a year and its stock price has been virtually comatose for the last nine months in the 10-a-share range. The stock received a brief spike in April to more than 13-1/2 a share when the online company was in talks to be bought by America Online.
But the deal fell through when a change in the tax policy was on the table in Congress, which would have made the deal cost hundreds of millions of dollars more than anticipated, a source said. CompuServe's majority shareholder, H&R Block, had been seeking a buyer for its 80 percent stake in the company.
Shares of CompuServe today closed at 10-1/8, unchanged from yesterday.
CompuServe reported revenues of $841.9 million for the year, up from $793.1 million the previous year. The company posted a net loss of $119.8 million for the year, compared with a net profit of $49 million year earlier.