today reported a smaller second quarter loss than expected, as
partnerships and new initiatives bring the company into position to grow revenue and reduce costs.
The company reported a loss of $7.9 million,
or 63 cents a share, for the
quarter ending June 30, compared to a loss of $15.4 million, or $1.29 cents a
share, for the same quarter a year earlier. Excluding a $2.5 million one-time
acquisition charge, Excite would have posted a loss of $5.4 million, or 43
cents a share.
Analysts expected a loss of 55 cents a share,
according to First Call.
The company, which announced its earnings after the market's close, saw
its stock gain 1/4 to close at 17-5/8.
"The company is spending more than it is taking in, but that is part of
building the business. We want them to spend as long as we see an increase
in top-line growth," said Brian Oakes, an analyst
with Lehman Brothers.
Revenue grew to $9.5 million, up from the $2.1 million reported last year and the
previous quarter's 26 percent increase.
The business model for search engine companies has been based on one source
of revenue: advertising sales. That has been a concern for analysts. Oakes
says additional revenue streams are needed to diversify and expand income.
During the quarter, Excite began to do just that. The No. 2 search
engine company has started branching out through deals with
Internet and media companies in an effort to increase traffic, build its
brand, and generate revenue through new outlets.
The deals announced during the quarter confirm the wisdom of the channel
strategy, said company CFO Robert Hood. "The deal with Intuit (INTU) is a confirmation of the content side, the Amazon (AMZN) deal is a confirmation of the advertising side, and the Netscape (NSCP) deal is a confirmation from the distribution side."
In June, Intuit (INTU) bought a 19 percent chunk of Excite for $40
million. That equity investment prompted the search engine company to
cancel a much-anticipated secondary offering.
Scott Ehrens, an analyst with Oppenheimer & Company, said the
partnership not only provides much-needed cash, but also opens the door to
Intuit's 10 million-strong customer base. That creates the possibility of a personal finance
channel within Excite, cobranded with Intuit, with revenue and cost sharing. That could be a springboard to developing transactional services.
Excite also announced a deal with Ticketmaster to provide direct
online ticketing and live event information. With the agreement, Excite
became the first navigation firm to offer Ticketmaster event listings
online and offer direct online access to ticketing with a credit card.
Netscape and Excite announced last week an alliance under which the
search engine company will produce a new navigational service providing
international information, dubbed International Netscape Guide.
Excite and Amazon.com announced a three-year distribution and programming
agreement which lets users buy books while browsing Excite's channels, and
lines up the bookseller to create original content for the channels.
"Through these partnerships, Excite will leverage its audience reach to
grow high-margin revenue streams such as transactions and merchandising
while at the same time reducing costs and business risks," said Oakes.