NaviSite misses estimates, offers grim outlook

NaviSite posted a wider-than-expected loss in its second quarter Thursday and warned that its third-quarter and fiscal 2001 sales will fall short of expectations.

The company posted a net loss of $31.9 million, or 54 cents a share, on sales of $27.7 million.

First Call consensus pegged NaviSite for a loss of 48 cents a share on sales of $28.8 million in the quarter.

NaviSite (Nasdaq: NAVI) shares closed unchanged at $1.91 ahead of the earnings report.

NaviSite provides application- and Web-hosting services, server and storage management, Internet streaming services, and security products.

Company executives told analysts to expect sales of $26 million in its third quarter and a loss of between 55 cents and 58 cents a share, below the Street's current estimate of $34.3 million and a loss of 45 cents a share, respectively.

"We are actively managing costs in a slower growth environment and also introducing substantial new value propositions, based on our intellectual property, which can significantly improve customers' economics in outsourcing," said Chief Executive Officer Joel Rosen in a prepared release.

For the fiscal year, the company now expects to record sales of between $108 million and $111 million and post a loss of between $1.96 and $2.03 a share.

First Call consensus expected NaviSite to lose only $1.72 a share in the fiscal year on sales of $128.4 million.

NaviSite, which is a majority owned operating company of CMGI (Nasdaq: CMGI) exited the quarter with $69 million in cash and short-term investments.

NaviSite managed to beat the Street in the first quarter when it lost $23.1 million, or 39 cents a share, on sales of $26 million.

The stock rallied up to a 52-week high of $164.94 last March before plunging to a low of $1.56 earlier this month.

Eight of the 14 analysts following the stock rate it a "buy."