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Juno, Prodigy trim 2Q loss
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July 26, 2001: 11:29 a.m. ET
Internet service providers cite cost cuts; aim to boost paid subscriptions
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NEW YORK (CNNfn) - Two of the nation's largest Internet service providers (ISPs) reported narrower second-quarter losses Thursday, citing cuts in operating expenses and efforts to increase fee-based subscriptions.
Juno Online Services Inc., said its second-quarter loss was trimmed 94 percent from the year-ago quarter.
For the three months ended June 30, Juno reported a loss of $2.6 million, or 6 cents per share, on revenue of $29.4 million, compared with a loss of $42.8 million, or $1.11 per share, on revenue of $29.6 million a year earlier.
New York-based Juno (JWEB: up $0.03 to $1.02, Research, Estimates) attributed the improvement to cuts in marketing expenses.
Juno CEO Charles Ardai said the company ended its direct mailings of software CDs, along with most television and print ads. It spent just $4.3 million on subscriber acquisition in the latest quarter, compared with $38.1 million in the year-ago period.
"We decided our goal was to shift from pure pursuit of market share to pursuit of profitability," Ardai said.
The company also reduced its free and cheapest Internet access subscriptions, shedding almost 20 percent of its users in three months.
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We decided our goal was to shift from pure pursuit of market share to pursuit of profitability.
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Charles Ardai
CEO, Juno Online Services Inc. |
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In addition, for the first time in its history, the company reported positive earnings before interest, taxes, depreciation and amortization (EBITDA). Excluding expenses related to its planned merger with rival free ISP NetZero, Juno reported EBITDA of $446,000, or 1 cent per share, for the quarter.
Last month, Juno said it would merge with NetZero, of Westlake Village, Calif., to create the nation's second-largest ISP, with about 7 million combined subscribers. The largest ISP, America Online (the parent of CNNfn.com), counts some 30 million subscribers.
Prodigy sees strength in DSL
Austin, Tex.-based Prodigy Communications Corp. said its loss for the second quarter narrowed to $32.4 million, or 46 cents a share, from $38.9 million, or 59 cents a share, a year earlier. Two analysts surveyed by First Call had estimated losses at 48 cents and 53 cents a share.
Net revenue rose to $92 million from $73 million. Prodigy (PRGY: down $0.65 to $6.55, Research, Estimates) posted EBITDA of $13.5 million, compared with a year-earlier loss of $7.9 million.
In May, the company said it expected revenue for the quarter of $86 million to $90 million and EBITDA of $5 million to $8 million.
Prodigy raised its full-year EBITDA forecast to between $40 million and $42 million from the $31 million to $34 million range. Even with the upward adjustment, it said it still expects to increase EBITDA in 2002 by 50 percent.
In addition to cutting expenses, the company credited its second-quarter results to its growth in broadband DSL customers. With its exclusive portal relationship with SBC Communications (SBC: down $0.34 to $43.04, Research, Estimates), Prodigy added 160,000 DSL customers in the second quarter, a 50 percent increase over the number added a year earlier.
"Second-quarter results demonstrate the strength of Prodigy's DSL business and our ability to execute our new business plan," CEO and President Paul Roth said.
"We're succeeding in meeting our promise to increase our earnings, while at the same time, we are devoting resources to a new Prodigy Internet experience that is designed for broadband customers," he said. 
-- from staff and wire reports
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