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Roundup: Egghead, F5, SCO, StarMedia top estimates

Egghead.com (Nasdaq: EGGS) lost far less than analysts anticipated in the second quarter.

After market close Tuesday, the online retailer of computer-related products reported a fiscal second quarter loss of $10.5 million, or 34 cents per share, not including one-time events. First Call's survey of five analysts predicted a loss of 43 cents per share.

During the second quarter, Egghead recorded a $2.7 million gain from changes in estimates of restructuring costs. Including that one-time benefit, Egghead lost $7.7 million, or 25 cents per share.

Second quarter revenue increased to $43.4 million, up 24 percent year-over-year. Egghead's customer accounts rose to 1.24 million, a 71 percent gain from a year earlier, and a 9 percent rise from the first quarter. Registered bidders for Egghead's auction service moved up to 535,000, a 13.5 percent gain sequentially.

Price wars, only partially offset by shipping and handling revenue, drove gross margins down to 5.6 percent from 7.2 percent in the first quarter.

Shares of Egghead rose 1/4 to 10 1/8 in Tuesday's regular trading prior to the quarterly report. Of six analysts surveyed by Zack's Investment Research, three have the equivalent of a "moderate buy" rating on Egghead, two maintain "hold" advisories on the stock, and one recommends it with a "strong buy" rating.

Other companies reporting quarterly results Tuesday:

  • F5 Networks (Nasdaq: FFIV) steamrolled analyst estimates on its way to posting a profit three quarters ahead of expectations.

    The provider of technology for managing Internet traffic reported fourth quarter net income of $2.3 million, or 11 cents per share based on 22.38 million shares outstanding at the end of the quarter. Earlier this month, F5 completed a secondary offering of 2.53 million shares.

    First Call's survey of four analysts predicted a loss of 5 cents per share for the quarter ended Sept. 30. Analyst consensus had forecast F5's first profit coming in the F5's fiscal third quarter.

    Fourth quarter revenue increased to $13.8 million, more than a sevenfold gain from $1.9 million in the year earlier period, when F5 lost $1.4 million.

    "We are pleased with our strong sales growth and the introduction of our exciting new products over the last quarter, as well as the success of our secondary public offering," said Jeffrey S. Hussey, CEO, chairman and president. "We have continued to grow our customer base."

  • CDnow (Nasdaq: CDNW) also cut losses faster than Wall Street expected.

    The online retailer of music reported a third quarter loss of $23.1 million, or 76 cents per share, excluding goodwill writedowns and merger-related costs. First Call consensus forecast a loss of 85 cents per share.

    Third quarter revenue increased to $36.6 million, compared to $13.9 million in the year ago period.

    CDnow recorded $8.1 million, or 27 cents per share, for amortizing intangibles stemming from the merger of CDnow and N2K earlier this year. The company also incurred a one-time charge of $2.9 million, or 10 cents per share, related to its pending merger with Columbia House. Including those events, CDnow lost $34.1 million, or $1.13 per share. About 68 percent of CDnow's product sales came from repeat customers, compared to 59 percent a year ago.

    Gross margins rose to 21.9 percent, from 20.9 percent a year earlier, because of higher ad sales, CDnow said. Advertising generated $2.6 million in revenue, compared to $1.9 million in the second quarter.

    "Our ability to generate multiple revenue streams allows CDNOW to take full advantage of the explosion of interest in online music," said Jason Olim, president and CEO.

    Also Tuesday, CDnow announced former TV executive Howard Blumenthal was hired to lead the company's interactive content unit.

  • Santa Cruz Operation (Nasdaq: SCOC) beat First Call's estimate by a penny in the fourth quarter.

    The vendor of Unix operating systems earned almost $5.4 million, or 14 cents per share in its fiscal fourth quarter. The lone analyst polled by First Call predicted a profit of 13 cents per share, for the quarter ended Sept. 30.

    Fourth quarter revenue rose 20 percent year-over-year, to $58.1 million from $48.6 million. SCO earned almost $2.7 million, or 8 cents per share in the fourth quarter of 1998. The growth of the Internet is boosting demand for SCO's server operating systems, said Doug Michels, president and CEO.

  • StarMedia Network (Nasdaq: STRM)
  • topped analyst consensus by 4 cents in the third quarter.

    The New York-based operator of Spanish and Portugese Web portals lost $24.6 million, or 42 cents per share, not including merger-related expenses. First Call's analyst survey predicted a loss of 46 cents per share.

    Including a $590,000 charge related to the acquisition of Webcast Solutions, StarMedia lost $25.2 million, or 43 cents per share.

    Third quarter revenue increased to $5.6 million, a 44 percent gain sequentially and 25 percent improvement year-over-year. "The positive results of the quarter as evidenced in our traffic growth, exceptional operational performance and strengthened financial position are very much in line with our business model," said Fernando Espuelas, chairman and CEO.>