PSINet's core business lags

PSINet (PSIX) today announced a narrowing fourth-quarter loss as it continued its transition from the consumer to corporate ISP market.

PSINet posted a net loss of $16.8 million, or 42 cents a share, for the quarter ending December 31, compared with a loss of $29.8 million or 89 cents a share in the previous year. The loss was largely in line with analysts' expectations, which had been lowered last month when the company said it would not meet projections.

Analysts were also expecting the company to post a gain or at least break even in the fourth quarter for its earnings before interest, tax, depreciation, and amortization (EBITDA). The company, however, posted a loss of $13.3 million.

"They weren't EBITDA-positive mainly because of lower revenue growth than they expected. Their wholesale business to small Internet access providers lacked the growth they were looking for and their core business was sluggish," said Youssef Squali, an analyst with Laidlaw Equities.

Revenues, meanwhile, rose to $22.8 million for the quarter, up from $14.1 million a year earlier.

"During 1996, we realigned our company to focus on extraordinary growth opportunities for corporate Internet services," said William Schrader, chairman, president, and chief executive, in a statement.

PSINet posted revenues of $89.8 million for the year, up from $38.7 million a year earlier. The company also posted a net loss of $55.1 million for the year, compared with $53.2 million a year ago.