Tech Industry

Concentric beats 3Q forecasts

Concentric Network (Nasdaq: CNCX) cut third quarter losses faster than analysts expected.

In third quarter results released after market close Monday, the San Jose, Calif.-based ISP and Web hosting service reported a net loss of $27.2 million, or 65 cents per share, including $13.5 million related to dividends, accretion and interest expense on Concentric's high yield debt and preferred stock and amortization of goodwill and other acquisition related charges. First Call's survey of 11 analysts predicted a loss of 69 cents per share.

Also Monday, Concentric announced two acquisitions with a combined value of $271 million. Concentric plans to buy Internet Technology Group Plc, a British-based ISP and hosting service, in a half cash, half stock deal worth about $217 million. 9 Net Avenue, a Web hosting firm in New Jersey, agreed to be bought for $54 million in stock and cash. Both deals are expected to close in the fourth quarter.

Third quarter revenue for Concentric increased to $38.1 million, up 76 percent year-over-year and 15 percent higher than the second quarter. Before taxes, interest and debt and amortization, Concentric lost $8.3 million, compared to an EBITDA loss of $8.7 million in the second quarter.

WebTV Networks generated 24 percent of Concentric's revenue in the third quarter, compared to 26 percent in the second.

Shares of Concentric have tumbled since mid-July. The stock closed Monday's regular trading at 23, down 7/8 for the session.

Last week, Robertson Stephens reiterated a "buy" rating on Concentric. Robertson analyst Richard A. Juarez has a $45 price target on the stock. Of a dozen Wall Street firms surveyed by Zack's Investment Research, five rate Concentric a "strong buy", five have the equivalent of a "moderate buy" rating, and two have "hold" advisories on the stock.>