For months, matchmaking site

TargetMatch

boasted that it is the only profitable Internet company on the Tel Aviv Stock Exchange. Why stop there? it boasted that it was one of the few profitable Internet companies in the world.

It can stop the blather, going by its results for the fourth quarter of 2000.

It was clear that TargetMatch would be hit by the dot.com slump. After all, most of its revenues are generated by advertisements on its websites. The first indications that the dot.com malaise was seeping into the company appeared in its third quarter financials, which showed slowing growth.

As for the fourth quarter, revenues dived 46% from the third quarter to NIS 3.1 million. Its fourth quarter revenue is smaller than in the first quarter of 2000.

The plunging revenue naturally impacted on the bottom line. The company switched from earnings of NIS 1.6 million in the third quarter of 2000 to a loss of NIS 640,000 in the fourth quarter. Worse, it posted an operating loss of NIS 712,000, which was partially offset by financing-related revenues thanks to cash reserves.

The company has NIS 12.8 million cash, mostly deriving from a NIS 10.2 million financing round back in June 2000. The company wisely preferred to compromise on the amount it could secured and on its valuation, sparing itself future liquidity problems.

Revenues for 2000 totaled NIS 17.9 million. NIS 4.8 million was attributable to subscription fees and the rest to revenues generated by advertisements. Net profit for 2000 came to NIS 2 million.

CEO Anat Levi, who controls the company together with her brother Muly Litvak, commented that TargetMatch doesn't exist in a vacuum. She explained that the company's revenue model was to a large extent based on direct marketing. But she added that the company is changing focus in keeping with circumstances and plans to increase its revenues from existing subscribers.

Levi isn't worried that the lovelorn subscribers will abandon the company's websites, as has been happening to the public-auction websites of

Yahoo!

(Nasdaq:YHOO). Firstly, unlike Yahoo's subscribers, TargetMatch's are already used to paying for service. Secondly, where are they gong to go? Rival websites will also charge fees.

TargetMatch has three websites,

DatingClub

, a job-search arena, and a tourism website. Only the dateline site generates revenues from subscriber fees. The job website based its business model on advertisements placed by human resource companies.

Levi believes that the dot.com slowdown will be apparent in the results of the first quarter of 2001. Nor will refocusing from direct marketing to revenues based on subscription fees generate results overnight.

Still, she retains her optimism. "Eventually, if you give real service to surfers, a service based on content, infrastructure and communications, you will get high yield on your investment," she concludes.