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Inktomi beats Street despite loss

The search and network cache technology provider loses 24 cents per share for the quarter, though revenues are up 343 percent.

Inktomi upped revenues 343 percent and beat the Street, even with a net loss of $5.8 million for the first quarter of its fiscal year.

Inktomi's operating loss, which does not include $645,000 in interest income, was $6.4 million, or 24 cents per share in the quarter ended December 31, compared to a 25 cents-per-share loss for the same quarter a year ago. Revenue for the first quarter was $10.7 million, more than four times last year's $2.4 million for the comparable period.

Wall Street analysts had been expecting an operating loss of 29 cents per share, according to First Call.

"Superb," said BT Alex. Brown analyst Tom Bain of the results. "They met or surpassed every milestone that they had set last quarter. Their revenue strength came from the number of new search engine customers coming online and also from their getting double the number of Traffic Server customers they had expected."

Those unexpected customers came from the Web hosting space, Bain said. Web hosting firms have been surprisingly quick to adopt Inktomi's caching platform in their own content distribution infrastructure, according to Bain.

For future quarters, Inktomi will have to do more of the same by increasing its customer rolls. Future quarters will also reflect revenue from Inktomi's nascent comparative shopping software. Bain expects that contribution to be minimal this year and more significant in fiscal year 2000.

Inktomi CEO David Peterschmidt said the results showed Inktomi is tapping into the heart of the market's demand for quality infrastructure.

"This company is truly firing on all cylinders," Peterschmidt said in an interview with CNET "We had a really strong quarter with search, Traffic Server continued to grow, and the quality of the revenue is just great. Having Cable and Wireless on board is like Intel winning Compaq. These are important and significant contracts, in addition to the raw revenue numbers."

Peterschmidt also held out high hopes for the shopping technology, which Inktomi will pipe into client portals much the way it does search technology today.

"Shopping applications out there today are crude and elementary, what you could think of as the .5 release," Peterschmidt said. "We'll be coming forward with first fully robust 1.0 shopping application."

Peterschmidt said the shopping application is running in a beta trial on GeoCities and LookSmart, and that a full version would be on the market in three or four months.

The per-share figures announced today do not reflect the stock split Inktomi declared last month. Counting the stock split, which goes into effect January 27, Inktomi lost 12 cents per share in the quarter.

Inktomi reported a 33 percent increase quarter to quarter in the number of search queries it processed, to 1.8 billion from 1.35 billion. Search customers added during the quarter include America Online's ICQ instant messaging client site, GeoCities, and Microsoft's MSN portal.

New customers of Inktomi's Traffic Server caching product include Cable & Wireless USA, Concentric Networks, Exodus Communications, and PSINet.

Inktomi completed a secondary public offering on November 18, which raised $90 million and brought the number of pre-split outstanding shares to 24.3 million.