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Microcap & Penny Stocks : XSNI - X-Stream Network -- Ignore unavailable to you. Want to Upgrade?

To: early player who wrote (1420)	6/22/1999 11:56:00 AM
From: Jeffrey D	Read Replies (1) \| Respond to of 3519

More Freeserve. Jeff Dixons' Freeserve Unit Unlikely to Be Profitable in First Year After IPO By Bundeep S. Rangar Dixons' Freeserve Unlikely to Be Profitable in First Year London, June 22 (Bloomberg) -- Freeserve, the U.K.'s largest Internet provider, is unlikely to post a profit in its first year, the company said. Next week it will begin gauging investor interest for the sale of shares next month. Freeserve, which does not charge subscription fees to its 1.25 million users, was started last September by Dixons Group Plc, the U.K.'s largest electronics and appliances retailer. Dixons had expected it to break even by this September. Now, as it spends on advertising and its share offering, that outlook has changed. Many Internet companies, such as top online retailer Amazon.com Inc., have yet to make a profit. Such companies, including Freeserve, initially spend to attract users and build market share, from which they can generate revenue from advertising and sales of goods and services in the future. ''We are in the investment phase right now,'' said John Pluthero, Freeserve's chief executive, in an interview. ''We want to be the U.K.'s home on the Internet.'' The company, which receives as much as 60 percent of the money users spend on phone calls to dial into its service, expects revenue from transactions conducted through its site to be the single largest component of its full-year sales. The registration of Web site addresses brings in about 10,000 pounds ($15,800) per week in pretax profit. Freeserve, which has about a third of the U.K.'s Internet access market, also makes money from advertising on its site. In May, its site attracted about 65 million ''visits'' from users. User Priority In the period from September to April, revenue from telephone calls accounted for more than half of its sales. Users spend an average of 16 minutes per day using Freeserve service. That does not imply, however, that they spent that time on the Freeserve Web site. They could easily have moved on to another site after logging on to the Internet. The company will give priority rights to existing Freeserve users when its sells shares, the company said. It is expected to list on the London Stock Exchange and Nasdaq, selling a minority stake of about 25 percent. The company is valued by analysts at $1.6 billion, or $1,280 for each of its 1.25 million users. Credit Suisse First Boston and Cazenove & Co. will be the global coordinators and brokers for the Freeserve sale. Buying and selling of goods and services to consumers is expected to reach 6.75 billion pounds by 2002 from 314 million pounds last year, according to market researcher International Data Corp. Freeserve invested $15 million in GlobalNet Financial.com last month for a stake in the financial services Web site UK- invest.com, which is offered on its own site. Dixons' shares, which have tripled since last September on investor enthusiasm for Internet shares, rose as much as 70 pence, or 6 percent, to 1,242p.