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ScreamingMedia soars on earnings, upgrades

ScreamingMedia Inc. (Nasdaq: SCRM) shares jumped over 40 percent early Friday, boosted by a strong third quarter and upgrades, and plans for profitability in 2002.

Shares of the Internet content services provider rose 2.00 to 6.88.

Excluding charges, ScreamingMedia posted a pro forma net loss of $5.4 million, or 16 cents per share easily beating First Call's estimated loss of 22 cents a share. Net loss narrowed from a loss of $5.4 million or 22 cents a share in the previous quarter. Year over year, this compares to the loss of $2.2 million, or 13 cents a share in the third quarter of 1999. The results for the third quarter of 2000, including charges relating to stock compensation and dividends, were a loss of $2.16 per share.

Revenue for the quarter was $6.6 million, up 40 percent sequentially from the $4.7 million seen in the previous quarter. Year over year, revenue was up 704 percent. According to the company, the record sales were due to an increase in customers, as well as higher set-up, licensing and monthly fees.

In the release, the company also said that it expects to achieve profitability in early 2002.

During the quarter, ScreamingMedia quadrupled the size of its content network to over 520 partners, up from 410 partners in the previous quarter. The company expanded its News!Stand offering, and signed alliances with Network Plus, Sequoia Software (Nasdaq: SQSW), BroadVision (Nasdaq:BVSN) and, among others.

Analyst reaction to ScreamingMedia’s quarter was bullish.

Bank of America upgraded its rating of the company to “strong buy”.

Analyst Jon Mano at Credit Suisse First Boston raised ScreamingMedia’s rating from “buy” to “strong buy”. He also lowered the 12-month price target on the stock to $23 per share from $30 to reflect value compression in the sector.

Credit Suisse also adjusted its earnings estimates for the company. The loss expected in 2000 was cut to 76 cents from 89 cents and in 2001 to 48 cents from 61 cents.

Reuters contributed to this report.