Inktomi jumps after first profit
Year-to-year quarterly revenue up 211 percent
By Myra P. Saefong, CBS MarketWatch
Last Update: 4:14 PM ET Apr 19, 2000 Movers & Shakers
Earnings Surprises
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FOSTER CITY, Calif. (CBS.MW) -- Shares of Internet software infrastructure company Inktomi jumped almost 15 percent Wednesday after it reported its first-ever quarterly profit, defying market expectations of a small loss, after revenue soared.
Inktomi shares rose 17 1/8, or 14.8 percent, to 133 1/8 after hitting an intraday high of 143 7/8 on Wednesday.
After the markets closed Tuesday, the Foster City, Calif.-based company (INKT: news, msgs) posted a second-quarter profit of $1 million, or 1 cent a share.
A year ago, the company lost $7.4 million, or 7 cents a share.
Analysts surveyed by First Call expected the company to report a loss of 2 cents a share for this year's second quarter.
The profitable quarter is a "milestone" and a "culmination of four years of hard work and dedication in which we have achieved strong revenues, created new markets with our products and won major customers worldwide," David Peterschmidt, chief executive of Inktomi, said in a conference call.
"Our balance sheet is solid," and for the first time the company has reported positive free cash flow, he said. "We have established Inktomi as the global leader in the Internet-infrastructure space."
Total second-quarter revenue reached $47.3 million, a 211 percent year-over-year gain and well above the First Call analyst estimate of $41 million for the quarter.
Inktomi's network products business, comprising its Traffic Server, Content Delivery Suite and associated services, contributed $30.8 million in revenue for the quarter, up 250 percent year over year.
In the quarter, the Inktomi search engine processed approximately 4.2 billion queries, roughly a 91 percent increase over the year-ago period, according to Peterschmidt.
Ahead of the news, shares of Inktomi added 24, or 26 percent, to end at 116 Tuesday. The stock moved 8 points higher in the after hours.
Strong product line growth
"We've had strong growth for Inktomi across all of its product lines," Peterschmidt said in an interview with CBS.MarketWatch.com.
"This is actually the eighth quarter in a row that our revenues have grown over 200 percent, so the profit came about naturally," he said.
"Right now, the outlook looks pretty strong for Inktomi. I think that the growth curve we're on right now has a good possibility of continuing."
"In the portal services side of the business, we added Lycos (LCOS: news, msgs) as a search engine partner, and that now gives Inktomi the four largest Internet sites in the world that it provides search services (to) -- that's Microsoft (MSFT: news, msgs), Yahoo (YHOO: news, msgs), AOL (AOL: news, msgs) and now Lycos," he said.
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04/22/2000 5:47:38 PM ET
Inktomi was not only profitable this quarter but at the same time generated $6 million in positive cash flow, Peterschmidt said. "That's very unusual for a company in its first quarter of profitability to also have positive cash flow."
When asked if the company will continue to report positive earnings for its third quarter, Peterschmidt said: "Obviously, now that the company is profitable and is ahead of analysts' estimates, we envision that the company will continue now to project and produce profitable quarters."
Inktomi to 'heavily' invest in wireless
Back in March, Inktomi announced a broad initiative to deliver its infrastructure software to the wireless market.
"We have now firmly planted a marker for the future of Inktomi as the de facto provider of core technology for the global wireless infrastructure," the CEO said in the company's post-report conference call.
"Wireless is a big market for Inktomi, and we plan to heavily invest in this area with product development, alliances and standard setting," he added.
The wireless market is estimated to be worth more than $220 billion market by 2005, "so wireless is going to be a large initiative," Peterschmidt told CBS MarketWatch. |
