Excite, Inktomi beat Street

The Internet search companies post quarterly losses that aren't as bad as analysts' projections

3 min read
Internet search companies Excite and Inktomi today posted quarterly losses that weren't as bad as Wall Street's projections.

Excluding one-time charges, Excite posted a net loss of $4.6 million, or 10 cents per share, for its second quarter, which ended June 30. That compared to a loss of $6.3 million or 26 cents per share for the same period last year.

A consensus of analysts forecast the Redwood City, California-based company to lose 21 cents per share, according to First Call. First Call had earlier projected a loss of 19.5 cents per share, but it updated its forecast yesterday. All the earnings figures have been adjusted for a 2-for-1 stock split that takes effect July 20.

Revenues for Excite were $33 million, more than three times the revenue of $10.1 million a year ago.

Inktomi, meanwhile, reported a net loss of $4.7 million, or 24 cents per share for its third quarter, compared to a loss of $2.1 million or 17 cents per share a year ago. First Call had projected that the San Mateo, California, network search and caching company would lose 26 cents per share.

Revenue for the quarter, which ended June 30, was 6.3 million, up more than threefold over the same period a year ago, when revenue was 1.5 million.

Excite and Inktomi join a number of technology companies in beating analysts' earnings expectations this quarter. Last week, Yahoo reported revenues of 15 cents per share, while analysts had forecast the company to earn 9 cents a share.

Excite fell 1.625 to 90 in after-hours trading on Instinet after the earnings report was released. The shares had advanced sharply in regular trades ahead of the earnings release, closing at 91.625 for a gain of 3.375.

Excite's net losses excluded $75.6 million in one-time charges including $56.8 million related the a partnership with Netscape Communications' Netcenter and $2.6 million in merger-related expenses, as well as other one-time costs.

The company also said it spent $16.4 million in stock acquiring Throw. As first reported by CNET NEWS.COM, Excite acquired the privately held online community, which is based in Seattle.

"A number of community sites have been successful in attracting large audiences," Excite said in a press release accompanying the earnings report. "Generating significant revenue has proven to be much harder. With the Throw features and functionality being integrated with Excite, the company expects to develop a successful business model around community services online."

Excite also reported traffic of 44 million "page views" per day in June, a 10 percent increase compared to March figures. The company said its partnership with Netscape had lifted Excite's at-home reach to almost 42 percent, citing research from Media Metrix.

Meanwhile, Inktomi, which reported its first quarter as a publicly traded company, reported growth in its business as well. Over the past three months, the company has signed deals with CNET (publisher of NEWS.COM), GoTo.Com, and Southam to use Inktomi's search engine technology.

It also signed up America Online to use its Traffic Server network cache, which stores Internet content on a network's local system to speed up deliver to users. Inktomi closed down 0.0625 at 67.9375.

Ryan Jacob, portfolio manager at the Internet Fund, said both companies appear to be in good shape because they are meeting analysts' expectations and increasing the number of customers using their services.

"[Inktomi's] results were very impressive, but for the most part expected" because the company recently completed a "road show" where it peddled the company's achievements to would-be investors. He added that despite initial Wall Street skepticism of Excite's deal with Netcenter, the pact appears to be paying off. "I think eventually they'll be vindicated for securing that agreement because Netcenter is generating a significant amount of traffic," Ryan noted.