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Technology Stocks : Freeserve (FREE) -- Ignore unavailable to you. Want to Upgrade?

To: donkeyman who wrote (39)	9/24/1999 7:50:00 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 58

FREE to report results next week: internetnews.com Marketing Drives Freeserve Q1 Loss September 24, 1999 International News Archives Marketing costs will help pile up first quarter losses at Britain's largest Internet company Freeserve Plc next Tuesday and analysts are expecting a slowdown in subscriber growth in a traditionally quieter period. Experts have pencilled in pre-tax losses of 3.7-6.0 million pounds before exceptional costs related to Freeserve's July float and are expecting revenues to rise to 3.0-3.4 million in the first 16 weeks -- up from 1.6 million in the fourth quarter. With little comparative data to be had for Freeserve, which has seen its shares slump below their 150p issue price amid concern about mounting competition from rival free services, analysts are focusing on advertising, development and recruitment costs and subscriber growth. SG Securities analyst Nicholas Bubb is forecasting annual marketing costs of around 20.5 million pounds and expects the number of active subscribers -- those using the service within the last 40 days -- to swell to 1.44 million from the 1.32 million recorded in July. CSFB, the broker which helped bring Freeserve to market, expects gross additions of 700,000 in the quarter and an active user count of around 1.4 million by August 21, leaving Freeserve on track to clock up 1.8 million users by financial year-end. "Lack of history is clearly a problem in forecasting the business, but we would expect second quarter active subscriber numbers to show some evidence of re-registration of users who have perhaps not used the service during the summer months," CSFB analyst David Clayton said. Some critics say although Freeserve was Britain's first Internet listing, it has been slow to set up services such as on-line banking, auctions and share price dealings despite rival offerings from the likes of Internet auction house QXL.com and Egg, the online bank from Prudential Corp . Freeserve's market leadership is also under intensifying threat from the likes of AOL Europe, a joint venture between heavyweights America Online Inc and Gemany's Bertelsmann AG , which launched a rival subscription-free Internet service in Britain last month. British Telecommunications PLC has also introduced a subscription-based "free" calls offer for Internet access. But as Freeserve's stock slid another 3.6 percent to 134p in the early afternoon on Friday -- having scraped a low of 125p at the day's opening -- market bulls hope results next week will confirm that concerns over declining momentum have been overdone. SG Securities Bubb believes the share price fall has been overdone, and rates the stock a buy to 200p. Unsurprisingly, CSFB also remains a buyer a sees value to 253p. However, Goldman Sachs has cut its share price target to 130p from 200p and market bear WestLB Panmure, highlighting concerns about a glut of rivals eating into Freeserve's virtual market, has reiterated a price target of just 60p.