Go2Net (Nasdaq: GNET) president John Keister said the company is comfortable with estimates for its fiscal second quarter ending March 31. First Call is expecting earnings of 11 cents a share.
Go2Net, along with other Internet stocks, has dipped as investors bail out of technology and Internet stocks. Shares of Go2Net are down 17 percent since last Friday. Although shares have fallen, they have held up pretty well.
"We feel like we've done well compared to the 60, 70, even 80 percent cuts of some companies' (stock)," said Keister, in a phone interview with ZDII Thursday afternoon. "As people start to look at the tech sector again, there will be more scrutinizing over earnings. "
Maybe profits matter after all.
Go2Net is one of the few Internet companies with an operating profit. Go2Net's is in a elite club of profitable Net companies that includes Yahoo! Inc. (Nasdaq: YHOO), America Online (NYSE: AOL), RealNetworks (Nasdaq: RNWK) and Lycos (Nasdaq: LCOS).
If the flight to quality in Net stocks continues, Go2Net could benefit.
Keister said he's also comfortable with fiscal 2000 estimates, which target an annual profit of 52 cents a share.
In its first quarter, Go2Net reported a profit of $7.3 million, or 16 cents a share, on revenue of $14 million.
"It was inevitable," Keister said on the subject of this week's dot-com exodus. "The market really had gone on a run in the last six or seven months. A lot of stocks have not commented on visibility for profit. People saw an opportunity to take some money off the table."
"The end game is, everyone will ask about profitability for every Net stock. In 1997, people were talking about investing in earnings multiples for 2000, and now its 2002. People keep pushing it out," said Keister. "Smart investors, and institutional investors may not be satisfied with this anymore. Everyone has to trade on a multiple of earnings and revenue growth, but very few companies have those two components. "
Licensing revenue from recent deals with National Discount Brokers (NYSE: NDB), Allegiance Teleco (Nasdaq: ALGX), and Net2Phone (Nasdaq: NTOP), as well as search engines like Goto.com (Nasdaq: GOTO) , Looksmart (Nasdaq: LOOK), and About.com (Nasdaq: BOUT) will all contribute to the upcoming quarters' strength, Keister added.
Keister said Go2Net is beginning to ramp up its sales growth. December quarter sales were up 367 percent over the year-ago quarter. "In the December quarter, revenue grew 40 percent from the October quarter," he said. "We believe we can continue to outpace the growth of our peers."
Advertising represented 63 percent of total revenue in December, but the company is working to balance licensing, subscription and e-commerce revenue. Keister said he expects advertising to account for 50 percent of sales in the next 12 to 18 months.
The company is slated to report results after market close April 17.