NewsEdge Announces Q1 Results, New Strategy --
Focuses Company Resources on eContent Market
New eTopics Product Captures More than 60 New Customers in Limited Release
BURLINGTON, Mass.--(BUSINESS WIRE)--May 9, 2000-- NewsEdge Corporation (Nasdaq: NEWZ) today announced first quarter financial results and a strategic realignment that dramatically broadens its focus from serving knowledge workers in Global 2000 corporations to providing digital eContent to over 2.5 million business oriented Web sites worldwide. This global plan capitalizes on the firm's media partnerships, technology, editorial expertise and international sales and support infrastructure to provide targeted business content applications that make corporate intranets, extranets, public Web sites, e-commerce exchanges and portals more effective.
"This is the biggest change in direction in the company's history," said Cliff Pollan, President and CEO. "We have been very successful selling news to knowledge workers for the past decade, and are using that success as the foundation for our move into new markets. Currently Delphi values the eContent market at $13 billion. We will now leverage a considerable portion of our resources to help current clients and other businesses extend their customer and supplier relationships onto the Internet."
Effective immediately, NewsEdge has reorganized its resources around eContent management, developing new e-content applications and adding new sales channels. Nearly half of the Company's resources will now be dedicated to the new eContent strategy.
Mr. Pollan continued, "The Internet economy is transforming the way goods and services are bought and sold. The Gartner Group estimates the market for BXB commerce to top $2.7 trillion by 2004. Accordingly there is vast, unmet need for powering these exchanges with business-focused content that can actually improve the experience and transactional effectiveness of eBusiness."
Strategic Focus on eContent Market
Today's Web economics are driven by a critical business need to build audiences as quickly as possible while achieving profitability. In today's business world the ability to simply attract site traffic isn't enough.
Mr. Pollan added, "NewsEdge is uniquely positioned to deliver vertically targeted content to help Web sites appeal to specialized audiences, foster high frequency usage, and ultimately, cultivate eCommerce. Nobody delivers more targeted electronic content on a daily basis to corporations worldwide than NewsEdge," said Mr. Pollan. "Our years of experience in developing media sources, together with the technology and editorial output from our NewsEdge Refinery(TM) provides us a significant competitive advantage in this attractive new marketplace."
"The next phase of eContent is "contextual commerce" -- the ability to map business content to transaction opportunities. Contextual commerce and eContent work in tandem as integral components in a business's long-term survival and together represent a significant potential revenue opportunity for the company."
Early Success for First eContent Product Offering
NewsEdge's first product specifically designed to exploit this strategic redirection is eTopics (see separate release, ("NewsEdge announces eTopics:Custom Editorial Content Now Available for Business Web Sites") The eTopics product delivers current, tailored business content to web portals, extranets and e-commerce exchanges. Previously available on a limited basis, orders with an annual value of over $1 million of the eTopic product have already been sold to over 60 customers as diverse as Agilent, micronpc, Industry Solutions On-Line, LTD and Purchasing Center.com. When adding these new product results to the company's existing efforts, NewsEdge's total eContent sales already exceed $3 million in annual contract value today.
With eTopics, companies can select topics from NewsEdge's extensive editorial library of 1,500 business-oriented topics. Each topic is fully incorporated into the site, providing visitors with the day's top stories in headline and brief format. Visitors can choose to delve into the full text article by clicking on the title. Each morning the site is stocked with fresh content from over 200 respected global information sources, including The Associated Press, Phillips, American Health Consultants, IDG (InfoWorld) and Bridge.
First Quarter Financial Results
NewsEdge today also announced its financial results for its first quarter of 2000 ended March 31, 2000. Reflecting one-time expenses of $1,368,000 related to retention payments, transaction costs and expenses incurred as part of the terminated acquisition of NewsEdge by Rowecom, Inc. and $2,066,000 related to asset write-offs and reserves associated with the Company's transition to its aforementioned eContent strategy, the Company reported a net loss from continuing operations of $7,132,000, or $0.40 per share, compared to a net loss of $1,257,000, or $0.07 per share, in the 1999 first quarter. The Company expects to incur an additional $550,000 in retention payments related to the Rowecom transaction in the second quarter of 2000. After giving effect to a $5,494,000 gain on the sale of its 80% equity interest in Individual.com, Inc. in February, net of operating losses, the Company reported a net loss of $3,497,000, or $0.20 per share, compared to a net loss of $3,185,000, or $0.18 per share, in the first quarter of 1999.
Excluding the non-recurring items, the gain on the sale of Individual.com and operating losses from the discontinued business segment, NewsEdge would have reported a net loss from continuing operations of $3,698,000, compared to a net loss of $1,257,000 in the year ago first quarter. Revenue for the first quarter of 2000 totaled $17,329,000, compared to $18,360,000 in the year ago quarter, which includes $641,000 related to discontinued product lines. Excluding harvested revenue, comparable revenue for the first quarter of 1999 was $17,719,000.
"NewsEdge is leveraging its core assets to enter an exciting new market ," said NewsEdge CFO Ron Benanto. "With approximately $17 million in cash, and the continuing receipt of proceeds from the sale of Individual.com and a debt free balance sheet, we are well capitalized to pursue this opportunity and are squarely focused on enhancing shareholder value."
About NewsEdge Corporation
NewsEdge Corporation (Nasdaq: NEWZ) is the leading provider of eContent applications for business web sites and enterprise intranets. NewsEdge's serves approximately 1,450 organizations, including 43 of Business Week's 50 largest global companies, with award-winning news and information solutions including NewsEdge Insight(TM), NewsEdge Live(TM), and NewsEdge Review(TM) topics. NewsEdge is headquartered in Burlington, Massachusetts with sales offices and distributors throughout North America, South America, Europe, Japan and the Middle East. For more information about NewsEdge Corporation, please visit the company's Web site at newsedge.com
(c)NewsEdge Corporation, 2000, all rights reserved. NewsEdge is a registered trademark of NewsEdge Corporation. All other product or service marks mentioned herein are those of NewsEdge or their respective owners.
Certain of the above statements on the Company's future revenue and financial performance, are forward-looking statements that involve risks and uncertainties. Actual results could differ materially as a result of a variety of factors, including, risks associated with acquisitions, the timely development and acceptance of new products, competitive developments, the success of relationships with third parties, and other risk factors described from time to time in the Company's SEC reports.
(Summary Financial Table, Consolidated Statement of Operations, Balance Sheet to follow)
NEWSEDGE CORPORATION
Summary Financial Table (unaudited), Excluding One-Time Items
(in thousands, except per share data)
Three Months Ended
March 31,
2000 1999
----- ----
Revenues $17,329 $17,719
Other revenues(a) 641
--------------- ------------
Total revenues $17,329 $18,360
Operating Expenses
Cost of Revenues 7,566 7,720
Customer support expenses 1,469 1,293
Development expenses 2,637 2,339
Sales and marketing expenses 8,795 7,937
General and administrative expenses 765 727
-------------- -------------
Total expenses 21,232 20,016
Operating loss (3,903) (1,656)
Interest income, net 229 432
--------------- ---------------
Loss from continuing operations
before taxes (3,674) (1,224)
Provision for income taxes 24 33
--------------- ---------------
Net loss from continuing
operations (3,698) (1,257)
=============== ===============
NEWSEDGE CORPORATION
Consolidated Statements Of Operations
(unaudited)
(in thousands, except per share data)
Three Months Ended
March 31,
2000 1999
Revenues $17,329 $17,719
Other revenues(a) 641
-------------- ---------------
Total revenue $17,329 $18,360
Cost of revenues 7,566 7,720
--------------- ---------------
Gross Profit 9,763 10,640
Operating Expenses #
Customer support expenses 1,498 1,293
Development expenses 3,243 2,339
Sales and marketing expenses 9,766 7,937
General and administrative expenses 2,593 727
--------------- ---------------
Total expenses 17,100 12,296
Operating loss (7,337) (1,656)
Interest income, net 229 432
--------------- ---------------
Loss from continuing operations
before taxes (7,108) (1,224)
Provision for income taxes 24 33
--------------- ---------------
Net loss from continuing
operations (7,132) (1,257)
Loss from discontinued operations,
net (1,859) (1,928)
Gain on the sales of
Invididual.com, Inc. 5,494 --
--------------- ---------------
Income (loss) from discontinued
operations 3,635 (1,928)
Net loss applicable to common
shares $(3,497) $(3,185)
=============== ===============
Net loss per common share
Continuing operations $(0.40) $(0.07)
Discontinued operations $0.20 $(0.11)
--------------- --------------
Total loss per common share $(0.20) $(0.18)
=============== ===============
Weighted average common shares
outstanding 17,684,000 17,305,000
=============== ===============
(a) "Other" represents terminated/harvested product lines that have been phased out and/or de-emphasized by the Company.
# 2000 first quarter expenses include certain non-recurring charges totaling $3,434,000. These include $1,368,000 in costs related to retention payments, transaction costs and expenses incurred as part of the termination of the Rowecom, Inc. acquisition of NewsEdge and $2,066,000 in asset write-offs and reserves associated with the Company's transition to its new strategic direction.
NewsEdge Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(in thousands, except share data)
March 31, December 31,
2000 1999
----------------- ----------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $16,673 $20,278
Accounts receivable 18,857 11,280
Due from WinStar 5,500 -
Prepaid expenses and deposits 5,603 5,132
----------------- ----------------
Total current assets 46,633 36,690
----------------- ----------------
Property and equipment, net 8,436 9,398
----------------- ----------------
Other assets 1,127 1,766
----------------- ---------------
Total assets $56,196 $47,854
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,353 $2,869
Accrued expenses 17,881 14,837
Deferred revenue, current 30,569 23,010
Current portion of long-term
obligations 181 303
----------------- ----------------
Total current liabilities 51,984 41,019
----------------- ----------------
Deferred revenue, nonrecurring 275 124
----------------- ----------------
Stockholders' equity:
Common stock 182 181
Additional paid-in capital 130,781 130,136
Cumulative translation
adjustment 19 (58)
Accumulated deficit (124,319) (120,822)
Treasury stock, at cost;
432,000 shares (2,726) (2,726)
----------------- ----------------
Total stockholders' equity 3,937 6,711
----------------- ----------------
Total liabilities & stockholders'
equity $56,196 $47,854
================= ================
The accompanying notes are an integral part of these condensed
consolidated financial statements.
--------------------------------------------------------------------------------
Contact:
Ron Benanto
NewsEdge Corporation
781-229-3070
ron.benanto@newsedge.com
OR
Ann Shannon
Mullen Pubic Relations
978-468-1155
ashannon@mullen.com
OR
Stewart Lewack, Robert Rinderman
Jaffoni & Collins Incorporated
617-236-0052, 212-835-8500
newz@jcir.com |
