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Go2Net beats 3Q forecasts

Go2Net (Nasdaq: GNET) handily beat estimates in the third quarter.

After market close Monday, the Web portal operator and provider of Internet technologies reported fiscal third quarter net income of $10.1 million, or 22 cents per share, excluding amortization. First Call's survey of 7 analysts predicted a profit of 15 cents per share.

Shares of Go2Net rose to 60 in afterhours activity immediately on the Island electronic communications network, immediately following the earnings announcement. The stock closed Monday's regular trading at 58, up 4 1/4 for the session.

Including amortization expenses of more than $20 million, Go2Net lost $10.3 million.

Third quarter revenue rose to $23 million, more than quadruple year-over-year and up 23 percent sequentially. Gross margin rose to 84.2 percent, compared to 79 percent a year earlier.

"In the June quarter, Go2Net's continued focus on scalable, high-margin businesses led to tremendous progress across all operating metrics and revenue streams," said John Keister, Go2Net's president. "We saw especially strong growth in licensing and transaction-based commerce, which now represent a majority of our revenue."

Transaction and licensing revenue generated 52 percent of Go2Net's revenue in the third quarter, and will increase to about two-thirds of overall sales, CEO Russell Horowitz told ZDII.

More than $310 million in e-commerce took place on Go2Net's websites and services during the third quarter. The company's Authorize.Net payment processing service picked up 12,000 merchants during the period, bringing the total to more than 82,000.

Go2Net's advertiser base rose to 597 at the end of June, compared to 358 a year ago. Recent concerns voiced by many Internet observers about online advertising are "well founded," Horowitz said, but he added that the top websites are still doing well because of offline advertisers. Less than 5 percent of Go2Net's sales come from "questionable dot-coms," Horowitz said.

Page views on Go2Net rose to 37.5 million in June, up 103 percent year-over-year. The company's HyperMart Network for small businesses now has more than 1 million members.

-- Larry Dignan contributed to this report.>