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StarMedia delivers strong sales, traffic growth in 1Q

StarMedia Network easily topped Street estimates in its first quarter Tuesday, posting a loss of $35.1 million, or 54 cents a share, on sales of $10.1 million.

First Call consensus expected the Spanish- and Portuguese-language Internet portal to lose 64 cents a share in the quarter.

StarMedia (Nasdaq: STRM) shares closed up 1/2 to 25 1/2 ahead of the earnings announcement.

The $10.1 million in sales marks a staggering 531 percent improvement from the year-ago quarter when it lost $15.6 million, or 35 cents a share, on sales of $1.6 million.

More important, however, was the company's impressive growth in page views for the quarter.

Total page views shot up to 2.1 billion in the quarter, a stunning 1,492 percent improvement from the year-ago quarter and a 28 percent jump from the fourth quarter.

Company officials said it exited the quarter with 3.3 million active e-mail accounts, up 670 percent from the year-ago quarter and 32 percent higher than the previous quarter.

"StarMedia's excellent results are especially significant this quarter in that both revenue and traffic increased in a quarter historically affected by seasonality," said CEO Fernando Espuelas in a prepared release. "Our ability to mitigate some effects of seasonality is testament that we are offering users the content, community, tools and services they want; and developing revenue streams that are more diversified and predictable."

Last quarter, StarMedia topped analysts' estimates when it lost $27.8 million, or 44 cents a share, on sales of $9 million.

StarMedia got more good news Monday when Merrill Lynch analyst Michel Morin said there is huge opportunity, including business-to-consumer, in every Internet sector in the Latin American market.

Morin said he expects companies such as StarMedia and El Sitio Inc. (Nasdaq: LCTO) to show accelerated growth through the rest of the year.

StarMedia shares hit the skids last week, falling to a 52-week low of 21 after peaking at 70 in June.

First Call consensus expects it to lose $2.36 a share in the fiscal year.

Eight of the nine analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.