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Netcom posts $11 million loss

Netcom lost $11.4 million in the second quarter as an ISP market shakedown looms.

In yet another sign that the Internet service provider market is beginning to consolidate, Netcom On-Line Communication Services company said it is considering takeover offers after reporting an $11.4 million loss for its second quarter.

The company has in the past been cool toward the possibility of a takeover. But Netcom's chief financial officer Tom Weatherford told The Wall Street Journal that the company now "would not oppose the right offer."

Netcom is a ripe target, according to analysts. Despite widening losses, the company boasts more than 500,000 subscribers to its Internet access service, $111 million in cash, and no long-term debt. Netcom, which went public in 1994, is not expected to turn a profit until late 1997 or early 1998.

Possible suitors include the major long distance carriers--now gearing up to provide large-scale Internet access services--and several regional Bell operating companies, according to the San Francisco Chronicle.

As industry giants such as Microsoft, AT&T, and MCI Telecommunications move into the Internet access business, analysts predict that a widespread consolidation of the market is inevitable because of increased competition.

PSINet reported a net loss of $10.9 million Tuesday for the second quarter. The company has announced that it has retained Merrill Lynch to explore a possible sale.

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PSINet losses near $11 million
Market a tight squeeze for new ISPs