24/7 Media (TFSM) missed revenue and bottom line estimates for the third quarter and offered a downbeat outlook for the fourth quarter, making the company yet another victim of the dot-com slowdown.
The Internet ad firm, which competes in the shadow of
, says the Internet advertising market, which turned surprisingly bad for the company in September, likely won't recover until the middle of next year. In the meantime, the company says it's cutting 200 jobs, or 17% of its workforce, by the end of 2000, as part of a reorganization the firm says will lead to $20 million in annual savings, and enable it to reach cash flow break-even by the end of 2001.
Shares in the Internet advertising firm fell hard Wednesday. Ahead of the firm's earnings announcement, its stock dropped 98 cents to close at $4.64. In after-hours trading on
, 24/7 Media had fallen to $4.00.
For the quarter ended September 30, 24/7 reported a pro forma net loss, excluding acquisition and equity-related costs and gains on sale of investments, of $22.5 million, or 59 cents per share, compared to a loss of $7.4 million one year earlier. The consensus of analysts surveyed by
was for a loss of 47 cents per share, with the most pessimistic analyst predicting a 52-cent loss.
Revenue for the third quarter was $48.1 million, nearly double the figure from one year earlier but below second-quarter 2000 revenue of $52.2 million. Analysts had predicted third-quarter revenue of $56.8 million, according to First Call.
Looking ahead, the company offered a more optimistic outlook for its email and technology businesses, but guided revenue down to the range of $48 million to $56 million for the fourth quarter. One analyst listed on First Call had revenue estimates for $70 million in the fourth quarter.
CEO David Moore blamed the company's results in part on an advertising market that did not bounce back, as anticipated, from a slow July and August. In addition, the company cut low-margin accounts to concentrate on more profitable customers, incurring charges of $3.5 million, or 9 cents per share. The charges stemmed from certain performance-based contracts and from costs incurred in connection with dropping less-attractive accounts.
The company's 24/7 Network ad-sales business will continue to suffer from the weak online ad market, Moore said. "We're definitely seeing a much more competitive marketplace out there," he said, citing ongoing "price compression."