Engage misses reduced estimates in 1Q

2 min read

Engage delivered more bad news after the bell Tuesday when it missed analysts’ reduced estimates in its first quarter, losing $48.7 million, or 26 cents a share, on sales of $41 million.

First Call Corp. consensus expected the online advertising and marketing services provider to lose 23 cents a share in the quarter.

That estimate was obviously too optimistic considering the company warned that it would post a loss of 25 cents a share earlier in the quarter.

Company officials said it missed its own loss estimate primarily because some of its customers were unable to pay their bills this quarter.

At least its sales, which were down 38 percent from the fourth quarter, came in right in the middle of the $40 million to $42 million it projected earlier this quarter.

Engage (Nasdaq: ENGA) shares closed up 28 cents to $1.97 ahead of the earnings report.

It posted a net loss of $112.3 million, or 64 cents a share in the quarter.

”Clearly, we are very disappointed in the results for the first quarter,” said CEO Tony Nuzzo in a prepared release. “In order to improve the financial health of Engage in this tough market, significant changes will be made in the short term.”

Nuzzo, who replaced Paul Schaut earlier this quarter, will have his work cut out for him considering the amount of cash Engage continues to burn quarter after quarter.

“It’s already a disaster,” said Chris Hansen, an analyst at Banc of America Securities. “It’s teetering on the edge of bankruptcy.”

Engage blamed the dismal results and shaky outlook on deteriorating online advertising sales not only by iffy dot-coms but also so-called “old-economy” companies.

DoubleClick (Nasdaq: DCLK) reiterated those concerns Monday when it warned that its sales and earnings in the next two quarters will miss analysts’ estimates.

Back in the fourth quarter, Engage tried to stem the tide of red ink when it consolidated five of its business divisions and shed 175 employees, roughly 13 percent of its work force.

Last quarter, Engage posted a loss of $23.9 million, or 14 cents a share, on sales of $66.7 million.

First Call Corp. consensus expects it to lose 53 cents a share in the fiscal year.

Seven of the 10 analysts tracking the stock rate it a “hold.”

Believe it or not, this stock was trading at $94.50 in March.