Critical Path Hunts Profit in Others' E-Mail: Bloomberg Forum
Bloomberg News
July 17, 1999, 6:47 a.m. PT
Critical Path Hunts Profit in Others' E-Mail: Bloomberg Forum
New York, July 17 (Bloomberg) -- Critical Path Inc., a fast-
growing 18-month-old provider of electronic-mail service to
companies, expects to turn its first profit by the end of 2000,
Chief Executive Douglas Hickey said.
''E-mail and the number of mailboxes, and revenue associated
with it, is growing 100 percent quarter to quarter,'' Hickey told
the Bloomberg Forum.
Critical Path manages e-mail accounts for corporations
including E*Trade Group Inc., the No. 2 Internet broker and an
investor in the company, as well as Sprint Corp., the No. 2 long-
distance carrier, and America Online Inc., the No. 1 e-mail
provider.
The San Francisco-based company signs multiyear contracts
with customers, collecting a monthly fee of as little as 20 cents
to $4 or $5 per mailbox. So far, the company has reported losses
exceeding $30 million.
Critical Path reported 1.4 million active mailboxes in the
first quarter. Hickey said the company will announce a new number
Thursday when it releases second-quarter financial results.
The CEO called accurate a July 6 report by analyst Richard
Juarez of BancBoston Robertson Stephens, an underwriter of
Critical Path's March 29 initial public offering and June 1
secondary offering. Juarez estimated Critical Path will report
serving as many as 3.5 million mailboxes.
The company's expected to report a 17-cent-a-share loss for
the quarter, the average estimate of four analysts surveyed by
First Call Corp. The company's also expected to break even by the
third quarter of 2000 and have a 9-cent profit in the following
quarter.
Early Warnings
''We never told anybody we'd never be a profitable
company,'' said Hickey, 44, who joined the company last year from
Frontier Corp. Critical Path did warn in regulatory filings that
with its ''history of losses,'' it might not achieve
profitability.
Besides adding contracts, Critical Path made an acquisition
and plans to complete two more by next month using cash ''in
excess of $200 million'' as well as stock, Hickey said. ''We
wanted to really build a war chest,'' he said.
Last month, the company acquired accounts from closely held
Fabrik Communications Inc. It's also agreed to acquire Amplitude
Software Corp., a provider of Internet calendar technology, and
dotOne Corp., another e-mail service company. Terms weren't
disclosed.
Critical Path is content to be ''the brand behind the
brand,'' providing e-mail, delivery confirmations and calendars
to America Online units CompuServe and ICQ, Hickey said.
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