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The Night Watch: InfoSpace Rockets Higher on Earnings News; Gateway Climbs as CEO Steps Down

Ladies and gentlemen, InfoSpace (INSP) has left the building.

In a performance worthy of the King in his prime, the company announced fourth-quarter pro forma earnings per share of 4 cents a share, sprinting past the average 1-cent analyst estimate from First Call/Thomson Financial. Last year, the company lost 3 cents a share. The growth story at InfoSpace was not limited to the bottom line, or earnings, but to the top line, or revenue numbers, too. Revenue came in at $66.1 million from the year-ago $29.4 million, inching about the analyst estimate of $65.8 million.

Tonight's hip-swiveling, spotlight-hogging performance aside, InfoSpace still faces trouble, though (as did a pre-bloat, post-Army Elvis). The company said that 2001's revenues would be flat with 2000's mark of $215 million, with 2001 coming in with a pro-forma net loss of 14 cents a share. This widely misses the analyst estimate of a 9-cent profit. The first quarter is now expected to come in with a 5-cent loss, against the analysts' 1-cent profit. Expect another announcement in a month detailing the company's strategy to boost performance.

The better-than-expected earnings release has put Infospace on late-night investors' radar screens. It was the most actively traded company on both Island and Instinet, two places where stocks trade even when Wall Street doors are closed. It gained a whopping $1, or 16.7%, to $7 on Instinet, after being up more than 35% before the warning sunk in.

Despite a market cap above a half billion dollars and a home base in Bellevue, Wash. -- not far from Microsoft's hallowed campus -- many investors may not even know what InfoSpace does. Well, it ain't a Web portal, but it is a Web presence, providing the guts of many Web sites, streaming maps and phone numbers and stock quotes to a wide array of clients.

The outfit began life as a publicly traded company on Dec. 16, 1998, before 1999's massive run-up and 2000's reality check. Back then it was known as, a name it would alter in April 2000, after doing what many other dot-com companies did -- buying small properties, announcing stock splits and running up to massive heights before the speculative bubble broke and harsh market forces rushed in. No longer a dot-com and no longer anywhere near its record high of $138.50, InfoSpace soldiered on, buying Go2Net in July in a $1.5 billion stock deal.

Since then, InfoSpace has not performed well, dropping from $50 on the day it announced the Go2Net deal to today's close of $6. Merrill Lynch turned on the company in December, cutting its rating and earnings forecast, citing overly aggressive expectations going forward. InfoSpace, which said it was comfortable with estimates, announced a management shakeup on Jan. 22, putting its former CEO and current chairman back into the CEO slot. This prompted another Merrill downgrade the following day, with InfoSpace cut to intermediate-term neutral.

But for this evening anyway, late-night traders were taking notice of InfoSpace's upside surprise and taking care of business.

A Gateway (GTW) is a two-sided affair, with options for both the entering and exiting.

Tonight, Gateway founder and chairman Ted Waitt entered, stepping back into the CEO role at the personal computer maker, which has seen its stock price fall from a high of $75.12. Jeff Weitzen, formerly of AT&T (T) -- and now formerly of Gateway -- will be stepping down from his role as Gateway's CEO just one year after taking the job.

"We have worked very hard over the past three years to transform Gateway in ways that would ensure its long-term success," said Weitzen, who will be retiring at 44, in a prepared statement. "I am really proud of the work we've done and of all that we've achieved, and I am really looking forward to spending more time with my wife and family."

Enter the investor. Gateway's struggling stock price performed better after-hours, gaining $1.34, or 6.2%, to $23 on Instinet.

Egads! Would you look at EGAN, or rather, eGain Communications (EGAN).

The company, which provides a service that allows customer service departments to automatically sort and respond to customer emails, soared $1.34, or 27.4%, to $6.25 on Instinet, after announcing second-quarter losses of 45 cents a share, crushing the 63-cent loss expected by analysts. Now, despite that earnings triumph and subsequent late-night ramp up, it's worth looking a little bit closer at eGain's earnings data.

Revenue came in at $13.8 million, up some 475% from the $2.4 million booked in the previous year. But, at the same time, that number isn't so far away from the $13.6 million expected, on average, by analysts. Looks like investors were playing that percentage and not the revenue expectation.

10 most active stocks on Instinet (6:30 p.m. EST)
Company Price Change Session Volume
InfoSpace (INSP) 7.00 +1.00 4,5000,119
Cisco (CSCO) 37.56 +0.31 531,514
Oracle (ORCL) 30.68 +0.25 266,439
Intel ( INTC) 37.16 +0.09 252,225
Microsoft (MSFT) 64.38 -0.13 233,150
Jabil Circuit (JBL) 35.75 -0.50 198,310
Vignette (VIGN) 8.81 -0.13 182,561
ADC Telecommunications (ADCT) 14.88 0.00 137,800
Ericsson (ERICY) 11.25 -0.13 110,740
WorldCom (WCOM) 22.63 -0.13 108,764

This information is provided by Instinet, a wholly owned subsidiary of Reuters (RTRSY). For further information, please contact Instinet at .

10 most active stocks on Island ECN (6:30 p.m. EDT)
Company Price Change Session Volume
InfoSpace (INSP) 6.94 +0.94 5,452,945
eToys (ETYS) 0.37 -0.01 265,628
Cisco (CSCO) 37.63 +0.38 101,380
Star Telecommunications (STRX) 0.66 +0.04 94,796
eGain Communications (EGAN) 6.40 +1.49 68,866
Oracle (ORCL) 30.41 -0.03 60,086
PSINet (PSIX) 2.56 +0.09 59,917
Covad Communications (COVD) 4.59 -0.13 51,684
Juniper Networks (JNPR) 116.50 +0.25 38,791
Ariba (ARBA) 38.44 +0.06 36,717

Island ECN, owned by Datek Online, offers trading, mainly in Nasdaq-listed stocks, from 7 a.m. to 8 p.m. EST.

Confused? explains how the rules change when the sun goes down in Investing Basics: Night Owl , a section devoted to after-hours trading.

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