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Onsale down on earnings news

Shares in the Internet auctioneer drop 9 percent one day after it posts a wider-than-expected loss but reports a rise in quarterly revenues.

2 min read
Shares of Onsale fell more than 9 percent today, one day after the online auctioneer's quarterly earnings announcement.

Onsale executives disagreed that the company missed earnings estimates, based on a consensus from First Call. Instead the company maintained that it met or beat Wall Street's expectations for its quarterly earnings when including charges that it said analysts should have factored into their calculations.

The company posted a second-quarter loss of $4 million, or 21 cents a share, wider than the loss of $226,000, or one cent per share, that it posted for the like quarter a year ago.

Onsale also reported a rise in quarterly revenues, to $50.8 million from $18.6 million a year ago.

"Their revenues were stronger...and, on balance, I think they're doing a great job," said Charles Finnie, an analyst with investment bank Volpe Brown Whelan.

The company's loss includes a one-time charge amounting to 3 cents a share for a marketing payment to Cendant, related to its previously reported partnership with Resort Condominiums International. The agreement with RCI, the world's largest timeshare-exchange company, helps Onsale move away from selling mostly consumer electronics.

Onsale said that it plans to launch two new auction sites, the Vacations & Travel Supersite and the Industrial Supersite, and that it also intends to sell sporting goods.

Finnie, who, according to Briefing.com today downgraded Onsale from "strong buy" to "buy," said the company could become one of the Internet's most trusted middlemen, along the lines of Amazon.com and E*Trade.

"Trusted intermediaries will be the most profitable business model on the Web, bar none," he said.

Onsale is competing against companies such as First Auction, Excite's Classifieds2000, and eBay, an online classified ad site that filed to go public earlier this month.

Onsale stock was up .1875 yesterday ahead of the news, closing at 26.625. Today the stock was off 2.5 to finish at 24.125.

The shares have traded as high as 36.8125 and as low as 8.375 during the past 52 weeks.