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United Online Keeps Expanding Its Reach

The cheap online service continues to add subscribers at the expense of rivals.

United Online (UNTD) continues to expand its domain at the low-priced end of the Internet access market.

In a quarter when

AOL Time Warner's

(AOL)

America Online reported falling subscriber counts, United Online reported 11% growth in paying subscribers, plus better-than-expected earnings.

Shares in United Online rose $1.30 Wednesday morning to $21.90.

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For the third fiscal quarter ended March 31, the low-cost and no-cost Internet service provider reported $73.8 million in revenue, just ahead of analysts' estimates and up from $50.9 million in the year-ago quarter.

Net income -- excluding amortization of intangibles, stock-related charges and certain one-time costs -- amounted to 25 cents per diluted share, beating the six-analyst Thomson First Call consensus of 21 cents, and up from a penny in the fiscal third quarter a year ago. Net income based on generally accepted accounting principles amounted to $7 million, or 15 cents per share, compared to a net loss of $7.3 million, or 19 cents a share, one year ago.

United Online, which operates the NetZero and Juno brand services, added 229,000 paying subscribers in the March quarter, bringing the total to 2.4 million. Last week, AOL -- saying it was focusing on subscriber profitability rather than volume --

reported a 290,000 decline in its U.S. subscriber count, to 26.2 million users.

On a call with analysts Wednesday morning, CEO Mark Goldston said the company would continue to focus on the value-priced portion of the dial-up Internet market, rather than trying, like its competitors, to build share in the costlier high-speed Internet connection market. "We view dial-up as a huge, viable and lucrative segment," he said.

Goldston said the company continued to benefit from the commoditization of dial-up access. Consumers understand, he said, "You get connected to the same Internet, no matter which ISP you select."