Big sales, big losses at Netcom

National ISP Netcom reports increased revenues despite stepping away from the consumer market.

CNET News staff
2 min read
National Internet service provider Netcom (NETC) today reported increased revenues for the fourth quarter despite stepping away from the consumer market.

Netcom, which is concentrating on the corporate market, reported revenues of $36.4 million for the quarter ending December 31, up 85 percent from a year ago and 14 percent over the previous quarter.

The company, however, posted a widening quarterly loss of $11.5 million, or 99 cents a share, compared with a loss of $5.4 million, or 55 cents a share, a year ago. The fourth-quarter loss was slightly narrower than the loss of $13.6 million in the previous quarter.

The number was better than analysts' expectations of $1.10 a share, according to First Call.

Last year "was a very important year for Netcom in terms of positioning the company for future revenue and earnings growth," said David Garrison, president and chief executive, in a statement.

As the company repositions its focus, he added, subscriber growth takes a back seat to more meaningful measures, such as average revenue per subscriber and revenue growth.

Netcom's average revenue per subscriber increased by three percent in the fourth quarter over the previous one, and the company expects to increase that rate through the year.

The company reported annual revenues of $120.5 million for 1996, more than double the $52.4 million generated the previous year. Netcom also posted a net loss of $44.3 million for the year, wider than the loss of $14.1 million a year earlier.

Last December, Netcom took a radical move by stepping away from the industry pricing standard of $19.95 a month and said it would increase its access fee. The pricing change was part of a larger plan to moving to serve small and medium-sized businesses instead of home users.

That move to a higher pricing came at a time when other online services like America Online were switching to the lower all-you-can-use $19.95 price plan.