Infoseek Reports Record Second Quarter Revenues
PR Newswire - July 23, 1998 16:40
SUNNYVALE, Calif., July 23 /PRNewswire/ -- Infoseek Corporation (Nasdaq: SEEK) today reported that revenues for the
second quarter of 1998 were $17.1 million, a 119% increase over revenues of $7.8 million for the second quarter of 1997.
The Company reported a net loss for the second quarter of 1998 of $1.3 million, or $0.04 per share, compared to a net loss
of $12.5 million, or $0.47 per share, for the second quarter of 1997. Infoseek's results for the second quarter of 1997 included
a $7.4 million restructuring charge associated with management changes and certain discontinued business initiatives. Excluding
the restructuring charge, the net loss for the 1997 second quarter was $5.1 million, or $0.19 per share. Earnings per share
computations for the second quarter of 1998 were based on average shares outstanding of 31.3 million.
For the first half of 1998, revenues were $31.5 million, a 125% increase compared to revenues of $14.0 million for first six
months of 1997. Net loss for the six months was $3.1 million, or $0.10 per share, compared to a net loss of $17.0 million, or
$0.64 per share, for the comparable prior year period.
Operating Highlights
Harry Motro, president and CEO of Infoseek, said, "This quarter marked continued progress toward our goal of building a
closer relationship with our users, as well as improved financial performance. During the quarter we completed a re-design of
our WBS.net community service, acquired 280 inc., an expert in on-line community applications, announced a communications
alliance with AT&T and continued momentum in our channels and programming with industry leading partners including N2K's
Music Boulevard and iVillage."
Motro continued, "In June, we announced one of the most significant deals in the history of the Company -- our proposed
acquisition of Starwave and alliance with The Walt Disney Company. Under this pending transaction, Infoseek and Disney
agreed to join forces to launch a new Internet portal service later this year. Infoseek will acquire Starwave's tremendous web
design and development talent and assets, including its joint venture interests in ESPN.com, the most popular sports site on the
web, and ABCNEWS.com, the fastest growing news site on the web."
Disney Alliance
Disney and Infoseek have agreed to form a new Internet Service that combines the resources of Infoseek, Starwave and
Disney. Later this year the companies intend to launch the new portal service that will combine Disney's unparalleled promotion
power and rich content, Infoseek's web consumer experience and navigation technology and the branded assets of ESPN.com
and ABCNEWS.com. According to Relevant Knowledge, in June, the unduplicated reach of the companies committed to this
new alliance and Internet Service would rank third in terms of total unique visitors behind Yahoo and AOL. Under terms of the
agreement, Infoseek will receive $70 million in cash and Disney's ownership position in Starwave. Disney will acquire a 43%
stake in Infoseek and a minority position on the Infoseek board. Disney will also purchase warrants enabling it to achieve a
majority stake in Infoseek over time. Infoseek will also acquire the shares of Starwave not owned by Disney in exchange for
Infoseek shares. The proposed transaction is subject to Infoseek shareholder approval and certain other closing conditions,
with a shareholder meeting currently scheduled to occur in September or October 1998.
Traffic and Reduced Dependence on Netscape
Total average daily pageviews for the month of June 1998 were 20.3 million. This is a decrease from 22.1 million pageviews
for the month of March 1998. This decrease was primarily due to a decrease in Netscape traffic, which declined by 1.9 million
daily pageviews from March to June. The company renegotiated its contract with Netscape in June and now purchases 15% of
Netscape's search rotation, down from 35% of the search rotation for the twelve prior months.
"One of our goals is to not be dependent on any single source of traffic," said Motro. "With Netscape constituting only 13% of
our daily pageviews in June, we have made progress towards that goal." Motro added, "The pending acquisition of Starwave
and its ESPN and ABC News joint ventures, which together had 12 million average daily pageviews in June, combined with
other traffic enhancing actions we intend to take in the second-half of the year will provide a better mix in the sources of our
traffic."
Maintains Reach Ranking
Despite the change in sources of traffic and its impact on pageviews, Infoseek maintained its number three ranking in overall
reach among the top five search engines according to RelevantKnowledge. RelevantKnowledge data ranked Infoseek behind
Yahoo and Excite and ahead of Lycos and Altavista.
New Marketing Programs
Aggressive marketing initiatives continued during the second quarter, beginning with the launch of a high profile advertising
campaign that incorporates outdoor billboards, radio spots, and online banners. A review by Advertising Age called the
campaign "smart, amusing and memorable." The second quarter also saw the launch of a high-impact mixed media campaign
featuring live electronic billboards and drive-time radio programming. The campaign, "What's Up?" invites America to find out
what's up in their community, or around the world by listening to local radio programs, viewing live electronic billboards and
using infoseek.com. The "What's Up?" campaign will run in 12 major markets nationwide.
Technology Leadership
Long regarded as a search technology pioneer and leader, Infoseek continues to enhance its award-winning navigation service
and won a significant industry award during the quarter. Infoseek announced Extra Search Precision(TM), a break-through
search technology that dramatically improves the quality of search results to deliver the most relevant results on the Internet.
Infoseek also added an Advanced Search feature to the Infoseek homepage that allows users to control the specificity of their
search. Infoseek's Ultraseek Server Intranet search product won Network Computing magazine's prestigious
"Well-Connected" award for superior results and ease-of-use.
Community Services
During the quarter, Infoseek bolstered its community offerings, co-branded with WBS.net, by launching a new Home Page
Center. Infoseek's users, including WBS.net's 3.0 million member community, can make use of increased capacity and a suite
of premium editing and design tools to help them create rich, highly personalized web-sites that reflect their own individuality
and online identity. Infoseek also acquired substantially all of the assets of 280 inc., an Internet company that has developed
leading-edge technologies and expertise in online community applications.
Channels and E-Commerce Partners
Infoseek continues to bring the best of the Web to its users by signing strong channel and e-commerce partnerships including
N2K's Music Boulevard, Apartments.com, Careerpath.com, the Total Entertainment Network and Digital Chef. The
Company and iVillage launched the industry's first information and navigation channel for women, providing this rapidly growing
online audience with content tailored to their interests. Infoseek also introduced its education channel that provides a bevy of
resources to address the specific needs of K-12, college students, and adults continuing their education.
Ultraseek Software
Infoseek's Ultraseek Server Software Division continued to grow its roster of premier customers. Companies such as Volvo,
The Chicago Tribune, Hallmark, U.S. Department of Transportation, Philips, and the Union Bank of Switzerland, selected the
Ultraseek server product in the second quarter for their Intranet and public web site search applications. Licensing of
Infoseek's Ultraseek Server software accounted for approximately 11% of total revenue in the second quarter.
Risks Associated with Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including those relating to the
Company's proposed alliance with Disney, including the acquisition of Starwave and planned launch of a new Internet portal
service, its goal of becoming everyone's first choice on the Internet bringing the best of the Web to users of its services, its
ability to continue to increase its levels of traffic and revenue, to grow the Company's Intranet and public web site search
applications for corporate customers, to continue to enhance and expand its product and services offerings, to successfully
implement branding and promotional efforts, to expand revenue opportunities, to be successful in pursuing the Company's
growth strategy, and to form content and marketing partnerships that benefit users. The failure to achieve any of the foregoing
initiatives could materially adversely affect the Company's business, financial condition and results of operations. Actual results
could differ materially from the results indicated in such forward-looking statements and any trends evident from historical
performance as a result of a number of factors, including but not limited to the Company's limited operating history, the
increasingly competitive environment for the company's services and products, and the Company's dependence on advertising
revenues and other parties for sales, technology, content and distribution. In addition, the Company's proposed strategic
alliance with Disney, including its acquisition of Starwave and development, launch and promotion of a new Internet Portal
Service is subject to shareholder approval and certain other customary closing conditions, furthermore there can be no
assurance that the Company will be able to successfully develop, launch and promote a new Internet Portal Service or that said
service will receive market acceptance.
About Infoseek
Based in Sunnyvale, Calif., Infoseek Corporation is a global media company and a leading Internet navigation service that is
designed to be everyone's first choice on the Internet. In addition to the Infoseek Internet service, Infoseek provides companies
with search and navigation software for their own Intranet, Extranet and Internet sites.
Infoseek is one of the most popular sites on the Internet because its search service is both easy to use and extremely powerful,
allowing both novice and professional users to find information on the Web quickly and easily.
By offering intelligent channels and one of the world's largest directories of Web sites organized by topic, Infoseek provides
consumers with a familiar and meaningful search experience in addition to accurate, high- quality search results. Infoseek has
commerce and content arrangements with entities including AmeriTrade Holding Corporation (Nasdaq: AMTD), Auto-By-Tel,
Borders Group, Inc. (NYSE: BGP), CMP Media, Inc. (Nasdaq: CMPX), Datek Online, Inc., DLJ/Direct, Microsoft
Corporation (Nasdaq: MSFT), PeopleLink Inc., Bell Atlantic (NYSE: BEL), UPS, Reuters and Talk City.
Infoseek's World Wide Web site and Internet navigation services can be accessed at infoseek.com. For more
information on Infoseek's software portfolio, visit software.infoseek.com.
NOTE: Infoseek, Ultraseek, and the Infoseek logo are trademarks of Infoseek Corporation, which may be registered in certain
jurisdictions.
INFOSEEK CORPORATION
CONDENSED STATEMENTS OF OPERATION
(In thousands, except per share data)
Three Months Ended Six Months Ended
(Unaudited) (Unaudited)
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
Total revenues $ 17,066 $7,786 $ 31,519 $ 14,026
Cost of revenues 2,524 1,533 4,678 2,830
Gross profit 14,542 6,253 26,841 11,196
Operating expenses
Research and development 2,667 2,374 4,797 4,102
Sales and marketing 11,863 7,541 22,440 14,191
General and administrative 2,061 1,825 3,923 3,295
Restructure and other charges - 7,349 - 7,349
Total operating expenses 16,591 19,089 31,160 28,937
Operating loss (2,049) (12,836) (4,319) (17,741)
Interest income, net 782 379 1,252 779
Net loss $ (1,267) $(12,457) (3,067) (16,962)
Basic and diluted net
loss per share $(0.04) $(0.47) $(0.10) $(0.64)
Shares used in computing basic
and diluted net loss per share 31,294 26,618 30,058 26,329
The above financial information has been restated to reflect the April
1998 pooling with WebChat Communications, Inc.
INFOSEEK CORPORATION
CONDENSED BALANCE SHEETS
(In thousand)
June 30, Dec. 31,
1998 1997
(Unaudited)
ASSETS
Cash, cash equivalents
and short-term investments $67,332 $31,439
Accounts receivable, net 8,759 6,921
Other current assets 730 648
Property and equipment, net 13,987 10,488
Deposits and other assets 3,838 1,993
Total assets
$94,646 $51,489
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable $3,485 $4,861
Accrued expenses and other current liabilities 14,216 12,565
Deferred revenue 4,794 2,564
Long-term obligations 3,408 4,493
Total liabilities 25,903 24,483
Shareholders' equity:
Common stock 119,840 75,036
Accumulated deficit (51,097) (48,030)
Total liabilities and shareholders' equity $94,646 $51,489
The above financial information has been restated to reflect the April
1998 pooling with WebChat Communications, Inc. SOURCE Infoseek Corporation
/CONTACT: Les Wright, Chief Financial Officer of Infoseek Corporation,
408-543-6000; or Alex Wellins or Todd Friedman, 415-296-7383, or Sandra
Badurina, 212-850-5659, all of Morgen-Walke Associates, for Infoseek
Corporation/
(SEEK)
this could be good or make no difference in this downward market. will watch. SR |
