Be Free, Inc BFRE is a good buy here at 70% of net cash value. Plus BFRE already announced $20 mill stock buyback. Mgmt will refuse the price to drop below $1, in my opinion
MARLBOROUGH, Mass., Apr 25, 2001 (BUSINESS WIRE) --
Company Announces Stock Repurchase Program and 20 Percent Reduction in
Workforce
Be Free, Inc. (Nasdaq: BFRE chart, msgs), a leading provider of a marketing platform that allows online businesses to attract, convert and retain customers easily and cost-effectively, today reported its financial results for the first quarter ended March 30, 2001.
Revenue for the first quarter of 2001 increased 49 percent to $5.4 million from $3.6 million in the first quarter of 2000, and decreased 15 percent sequentially from $6.4 million in the fourth quarter of 2000. The net loss for the first quarter of 2001, excluding restructuring charges and non-cash charges for equity-related compensation and intangible assets and impairment, was $6.6 million, or $0.10 per share, compared with $3.7 million, or $0.07 per share, in the first quarter of 2000 and $4.1 million, or $0.06 per share, in the fourth quarter of 2000.
"Be Free delivered on first-quarter financial expectations in an incredibly tough operating environment," said Gordon Hoffstein, the company's chairman and chief executive officer. "I believe that this performance is a testament to the strength of our entire organization, the value of Be Free technology and services, and the incredible determination of Be Free to build on its leadership position."
Stock Repurchase Program
Be Free also announced its Board of Directors has authorized the repurchase of up to $20 million of Be Free Common Stock. Purchases are authorized to be made from time to time throughout the remainder of 2001 in the open market or in privately negotiated transactions depending on market conditions. The repurchase plan does not obligate Be Free to repurchase any specific number of shares and may be suspended at any time. Shares acquired would be available for use under Be Free's employee stock plans and for other corporate purposes.
"Our management team and board of directors chose to earmark a portion of our cash for the buyback of our stock because we strongly believe in the long-term value of Be Free," said Hoffstein. "With approximately $148 million, or $2.20 per share, in cash and marketable securities, and with our stock trading at $1.17 as of April 24, we believe Be Free shares are an extremely attractive investment for our company."
Restructuring and Reduction in Workforce
As a result of the continued losses of dot-com customers and a longer-than-anticipated sales cycle, Be Free announced measures taken to streamline operations and align its cost structure with current market conditions. The company reduced its workforce by four percent in mid-March and a further 16 percent yesterday. In addition, it will reduce and aggressively manage other discretionary expenses. The company recognized a related restructuring charge of $312,000 in the first quarter and anticipates a restructuring charge of approximately $1 million in the second quarter.
The company also announced that due to the same market conditions, it has suspended development of a new product, which would have integrated its personalization technology with its BFAST partner marketing service. That technology was purchased with the company's February 2000 acquisition of TriVida Corporation. As a result, the company has recognized in the first quarter a $103 million reduction in the value of goodwill and other intangible assets and fixed assets related to the acquisition. The intangible assets had originally been valued at $165 million when the company acquired TriVida for approximately 2.9 million shares of Be Free Common Stock (adjusted for a two-for-one stock split). The company announced that it is continuing development of enhancements to its BSELECTSM Onsite personalization service, its first product developed from the technology acquired from TriVida Corporation.
"We believe that these cost reductions will allow us to keep our low quarterly cash burn rate," said Hoffstein. "This gives us ample cash to make it through this economic downturn, while continuing to invest in new product development, fortify our BFAST leadership position and expand our position beyond the market for our BFAST partner marketing service with our BSELECT Onsite recommendation service."
Performance Review
Be Free experienced continued demand during the quarter from brick-and-mortar businesses moving online that are seeking effective and cost-efficient online marketing programs. The company launched 31 customers this quarter. Customers adding Be Free marketing programs included Microsoft Corporation's Shop.Microsoft, ZDNet, Hearst Corporation, Seagate Removable Storage Solutions, Bass Pro Shops and 3Com. In all, the company's core of live customers increased 32 percent to 317 from 240 at the end of the first quarter of 2000.
"Our existing customers' marketing programs continued to grow in success. Customers exceeding their minimum monthly payments grew to 49 percent of our total customers from 22 percent in the first quarter of 2000 and 37 percent last quarter. "During the quarter, we continued to feel the impact of the fallout among dot-com businesses," Hoffstein said. "We lost 72 customers, almost all pure-play dot-com companies. However, these companies represented only nine percent of revenue."
"We continue to focus our customer-acquisition efforts on brick-and-mortar industry leaders that are adding an online component to their business strategies. Looking at our sales pipeline, the quality and potential value of our prospects are very high. However, we also are finding that the sales cycle is longer than we experienced in the past. We believe that this is a combination of the soft economy and the fact that many of our prospects are brick-and-mortar companies that are just transitioning their businesses to the Internet. These companies are often at the beginning of the adoption cycle for selling online and thus the sales process is longer."
Strong cash position
Be Free continued its low cash burn rate of $5 million from operations in the first quarter. The company spent an additional $1 million for capital expenditures for a total cash burn of $6 million. At the end of the first quarter, Be Free had $148 million in cash and marketable securities. The company believes that it will have more than $100 million at break-even, before non-cash charges.
Strategy and Business Outlook
Commenting on Be Free's outlook for 2001, Hoffstein said, "We expect continued revenue softness through the second quarter of 2001. However, because we see greater revenue being driven through fewer, larger customers, our business model has become even more efficient. And so, even with a delay in our revenue, we believe that we will be very close to break even, before non-cash charges, in the first quarter of 2002, and profitable by the second quarter of 2002."
Hoffstein continued, "We continue to believe we have the financial resources to execute in this environment, and will continue to align ourselves with leading companies that are moving online to capitalize on the Internet's reach and efficiencies."
First-quarter Conference Call
Be Free will provide a live audio Webcast of its first-quarter conference call for investors at 10:30 a.m today. Investors who want to hear the call should log on to the investor relations section of Be Free's Web site, www.befree.com, at least 15 minutes prior to the event's broadcast. Then, follow the instructions provided to assure that the necessary audio applications are downloaded and installed. The call will be available on the investor relations section for one week. After that, investors can access an archived version of the call on Be Free's Web site.
About Be Free, Inc.
The Be Free marketing platform allows online businesses to attract, convert and retain customers easily and cost-effectively. The company provides a uniform system for tracking, managing, measuring and analyzing all of a business's online marketing programs. These services are hosted, allowing a business to deploy its marketing programs rapidly, without placing time intensive and expensive demands on its own technical resources.
With Be Free's industry-leading BFASTSM partner marketing services, businesses manage and track strategic partners and affiliates - compensating these selling partners based on their performance. Be Free's BSELECTSM Onsite service allows a business to convert visitors to buying customers by recommending relevant products in real time. For more information about Be Free and its products and services, visit befree.com.
Safe Harbor Statement
These forward-looking statements include, but are not limited to, our plan to repurchase shares, statements about our future financial performance, such as our expected revenue growth, future losses and profits, cash expenditures and cash balances, the level of customer transactions, as well as statements about the growth of performance marketing and the future market conditions for our services. These statements are based on Be Free's current expectations, hopes, beliefs and estimates and invoke risks and uncertainties that could cause actual results to differ materially from those anticipated or projected. The risk factors include, but are not limited to:
--If the Internet fails to grow as an advertising, marketing, and sales medium, our future revenue and business prospects would be materially and adversely affected;
--System disruptions and failures may result in customers' dissatisfaction, customer loss or both, which could materially and adversely affect our reputation and business;
--To be competitive we must continue to develop new and enhanced services and our failure to do so may adversely affect our prospects;
--The Internet generates privacy concerns which could result in market perceptions or legislation which could harm our business, result in reduced sales of our services, or both;
--If we infringe upon the intellectual property rights of others, we could be exposed to significant liability;
--If we fail to manage effectively the rapid growth in our operations, our business and prospects will be materially and adversely affected;
--We may not achieve the expected benefits of our acquisition of TriVida;
--If we fail to attract and retain key personnel, our business will be materially and adversely affected; and
--If we are not able to overcome the challenges of our planned international expansion, our revenue and our prospects for profitability may be materially and adversely affected.
Further information about risk factors that could affect the Company's performance are contained in the Company's filings with the Securities and Exchange Commission, including but not limited to those set forth in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors That May Affect Future Results" in its annual report on Form 10-K for the fiscal year ended December 31, 2000. Be Free disclaims any obligation to update these expectations, hopes and beliefs.
BE FREE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
Three Months Ended
March 31, March 31,
2001 2000
Revenue $ 5,422 $ 3,629
Operating expenses:
Network costs 1,421 603
Sales and marketing 5,264 3,559
Client services 2,059 1,527
Development and engineering 3,234 1,568
General and administrative 2,222 1,176
Restructuring charges 312 -
Equity related compensation 773 272
Intangible amortization and
charge for impairment of assets 116,491 5,349
Total operating expenses 131,776 14,054
Operating loss (126,354) (10,425)
Interest income, net 2,227 1,081
Net loss $ (124,127) $ (9,344)
Basic and diluted net loss per share $ (1.94) $ (0.17)
Shares used in computing basic and
diluted net loss per share 64,035 53,455
Supplemental Data:
Net loss $ (124,127) $ (9,344)
Restructuring charges 312 -
Equity related compensation 773 272
Intangible amortization and charge
for impairment of assets 116,491 5,349
Supplemental net loss $ (6,551) $ (3,723)
Supplemental net loss per share $ (0.10) $ (0.07)
Shares used in computing supplemental
net loss per share 64,035 53,455
BE FREE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
2001 2000
ASSETS
Current assets:
Cash, cash equivalents and marketable
securities $ 147,771 $ 149,860
Accounts receivable, net of allowances 3,302 3,903
Prepaid expenses and other current assets 4,547 4,815
Total current assets 155,620 158,578
Marketable securities - 4,021
Property and equipment, net 16,789 17,443
Intangible assets, net 4,863 119,217
Other assets 1,077 1,116
Total assets $ 178,349 $ 300,375
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 7,886 $ 6,794
Deferred revenue 1,956 1,250
Current portion of long term debt 2,629 2,593
Total current liabilities 12,471 10,637
Long-term debt, net of current portion 2,048 2,781
Total liabilities 14,519 13,418
Stockholders' equity 163,830 286,957
Total liabilities and stockholders' equity $ 178,349 $ 300,375
Supplemental Data:
Cash, cash equivalents and marketable
securities $ 147,771 $ 149,860
Marketable securities - noncurrent - 4,021
Total cash, cash equivalents and
marketable securities $ 147,771 $ 153,881 |
