Go2net Shares Skyrocket As Internet Firm Posts Unexpected Profit
Dow Jones Online News, Friday, November 13, 1998 at 16:18
NEW YORK -(Dow Jones)- Go2net Inc. shares soared Friday after the
company reported strong fourth-quarter results late Thursday.
The Internet-service provider's earnings of two cents a share,
excluding items, for the three month ended Sept. 30 compared with a
year-earlier loss of nine cents a share.
"These days anything related to the Internet with a whiff of
profitability is a pretty hot commodity," said Needham & Co.'s Dalton
Chandler, the sole analyst following the stock. "They reached
profitability two quarters ahead of my estimates."
Chandler had expected the company to report a loss of five cents,
excluding one-time items.
Go2net (GNET) Chief Executive Russell Horowitz attributed the strong
earnings to the company's technology and user-driven sites, which
include information on financial services and games.
Go2net's sites are based on a software model that allows them to
basically "run themselves," Chandler said.
"Their sites are highly automated and low maintenance so they have a
cost structure advantage over other companies doing the same things,"
Chandler said. "Because of that advantage, the company exceeded my
revenue estimate for the quarter and that pretty much all fell to the
bottom line."
Go2Net spent about $1.3 million on sales and marketing in 1998 and
has relied primarily on "word-of-mouth" to make its combined sites the
28th most trafficked on the Internet.
"We see over one million users on our sites each day," Horowitz said.
The executive said he expects the traffic on the sites to continue to
grow. The focus now is on the company's destination site to be launched
later this month, he added. The menu-type site will act as a portal to
all of Go2net's content on the Internet.
To increase awareness of Go2net's services, the company will increase
advertising and marketing spending to about $2 million in 1999, Horowitz
said.
Chandler puts Go2net earnings at 27 cents a share for fiscal 1999 and
82 cents for 2000. Go2net lost 16 cents, excluding items, in fiscal
1998.
Go2net shares earlier Friday rose as high as $51.75, past their
previous 52-week high of $39 set April 15. They finished the session at
$39.25, up $9.75, or 33%. Volume was a brisk 4.1 million, compared with
average daily turnover of 45,400.
|
