Infoseek stock drops after the company reported a widening fourth-quarter loss.
Infoseek closed at 9-3/4 a share, down half a point from yesterday. The stock slid as low as 9 during morning trading despite the company's stronger-than-expected financial report.
The company reported a widening fourth-quarter loss as it increased marketing expenses, but the search engine company still managed to beat analysts' estimates.
Infoseek reported a net loss of $3.95 million, or 15 cents a share, for the quarter ended December 31, compared with a loss of $1.58 million a year ago. This loss was greater than the $3.7 million loss in the third quarter.
But the search engine company beat Wall Street's expectations of a loss of 17 cents a share for the quarter. Revenues for the quarter climbed to $6.1 million, up from $695,000 a year ago. Infoseek also grew its revenues 52 percent over the previous third quarter.
"Infoseek benefited from continued traffic growth and saw the number of advertisers increase 44 percent during the quarter to 277 advertisers," said Robin Johnson, chief executive and president, in a statement.
Traffic during the quarter reached an average of 4.5 million page views per day, up from 3.5 million in the previous quarter, said spokesman Steve Grady. The company also increased traffic coming directly to the site by 118 percent between June to December, which serves as benchmark on brand loyalty, Grady added.
Revenues for the year reached $15.1 million, up from $1 million a year ago. And its net loss was $15.9 million, compared with a loss of $3.7 million a year ago.
Despite today's punishment of the Infoseek stock, analysts say that search engines like Infoseek and its competitors Yahoo (YHOO) and Lycos (LCOS) have largely outperformed Wall Street's expectations on revenue and traffic growth. Some analysts have said they expect Infoseek to pull a profit in 1997.
During the quarter, Infoseek redesigned its navigation service to improve the ease of its service and also created Infoseek Network, which is designed to provide advertisers with targeted advertising on third-party sites.
Infoseek also rolled out a localized version of its service in Japan, in addition to offering translated Infoseek versions in French, Spanish and German. It's a move similar to that undertaken by Yahoo.
The company, which announced its results after the market's close, finished the day at 10-1/4 a share, down 1/8.