In another sign that the Internet ad market is unlikely to recover soon, Internet ad firm
is saying the path to profitability is taking longer than it expected.
On Wednesday night, the Internet advertising firm backed away from previous forecasts that the company would be cash-flow positive by the end of the fiscal year ending in July. "It is prudent for us to suspend our previous guidance," which was
made as recently as two weeks ago, said Tony Nuzzo, who started as president and CEO in November. Engage didn't say when it now expects to be cash-flow positive.
Despite the retreat, Engage says it still believes it has enough money to sustain itself until it can report positive cash flow from operations. The company had $86 million in cash and cash equivalents on hand as of the end of December.
Engage, which announced a software and consulting services deal with
Fuji Photo Film
Wednesday morning, rose 88 cents, or 44%, to $2.88. In after-hours trading on Island after the call, Engage slipped to $2.44.
The company's difficulties reflect not only the troubles in the online ad market, but also the challenges that
, which owns a majority of Engage, faces as it, too, hopes to get most of its operations to cash-flow profitability by July 31.
In a conference call with Wall Street analysts that was polite but strained, Engage said it expected to report second-quarter revenue of $25 million and a cash operating loss, excluding noncash expenses and one-time charges, of $55 million, or 28 cents per share. The company said earlier this month that it was eliminating 550 jobs, or half its staff, and taking a restructuring charge of $40 million to $45 million.
The company said it was operating under the assumption that the global media market would be flat to down through 2001. But, resisting several attempts by analysts to get information about the company's outlook beyond the second quarter, Engage said analysts would have to wait until the second-quarter conference call in mid-March to hear further details for the company. "At the end of 39 business days, I think there's only so much I can give you with the degree of confidence I promised," Nuzzo said.