America Online and Checkfree were among the 47 information industry companies that together saw a 94.8 percent in net income, according to a new survey.
The companies' combined earnings fell to $22 million from $422 million for the quarter ending September 30. "It is about half and half. Half [the companies] had losses and half had [net] income," said the Electronic Information Report's senior editor Lynn Dougherty. "But a half-dozen companies had large losses."
These companies had higher operating costs due to restructuring, increased market spending, and write-offs of nonprofitable businesses. Twenty-one of the 47 companies questioned for the survey had net losses or declines in net income.
Checkfree, for example, had a 165 percent growth in revenue for the quarter but reported a net loss of $7.7 million, compared with a net loss of $168,000 for the same period last year.
America Online reported a $353.7 million loss in net income, compared to a $10.3 million loss for the same quarter last year due to a change in accounting procedures. Acxiom (ACXM), on the other hand, reported a 53.8 percent increase in net income for the quarter. Revenue also increased 56.4 percent over last year.
Combined income for the companies grew 15.9 percent to $5 billion from $4.3 billion in the same quarter last year.
Dougherty added that being able to survive in this highly competitive market takes a lot of money dedicated to sales and marketing. "This is an industry that requires a lot of investment to keep up. But as soon as you keep up with it, it has moved on. Keeping up with technology and competition is a huge investment."
The market is getting tougher and name recognition is a must, she said. "Companies are literally going door to door to corporations. This market is heavily field-sales oriented; this is not a quick sale. It takes a face-to-face meeting, demonstrations, and follow-up visits."
Other companies questioned for the survey include A.D.A.M. Software, Thynx, and Netscape Communications (NSCP).