Mail.com’s Big Move Out Of Advertising

Mail.com Inc. is getting out of the online advertising business to focus on messaging. As such, the company promoted the heads of the outsourced messaging business to oversee all of Mail.com.

Amid announcing losses that were in line with expectations, the Silicon Alley company also said it has retained the services of SG Cowen to sell its advertising network business, which provides email-based advertising and permission marketing services. Mail.com’s outsourced messaging business provides a robust suite of services to enterprises, carriers ISPs and Web sites.

As a result of the strategic shift, Mail.com’s current chief executive, Gerald Gorman, will step aside but will retain the position of chairman.

Brad Schrader, who was formerly President of Mail.com’s outsourced messaging business, has been appointed President of Mail.com. Current Mail.com President Lon Otremba has been appointed Vice-Chairman of the Board.

“We see the online advertising industry consolidating among the larger ad networks and media companies. As this happens, targeted inventory is becoming a key value-added offering. Mail.com’s ad network is uniquely positioned not only because of its scale, but because our inventory is 100 percent targetable. We believe its value can be better maximized by a broader scale ad network or media company,” said Gerald Gorman, Chairman of Mail.com.

Mail.com’s served over 5.5 billion ads in the third quarter.

“With the sale of the ad network, our outsourced messaging business has a clear and focused mission to continue building its customer base by providing a robust suite of messaging services to those companies that choose to outsource their messaging needs to an expert,” Gorman said.

Separately, Mail.com reported pro forma net loss of $32.9 million, or $0.55 per share. Analysts were expecting a loss of 56 cents. Revenues rose to $18.5 million, thanks to $15 million coming from the messaging business.

The Company expects revenue for the fourth quarter of 2000 to be in the range of $19 million to $21 million. As a result of our decision to focus on the outsourced messaging business and our drive to profitability, we are streamlining the organization, taking advantage of lower cost areas and further integrating our technology and operational infrastructures. This will result in restructuring and rationalization charges aggregating $8-10 million. The majority of these charges will be taken in the fourth quarter and the remainder will be taken in the first quarter of 2001. The pro forma net loss per share excluding non-operating, restructuring, rationalization and certain non-cash items is expected to be in the range of $0.50 to $0.53.

For year 2001, assuming that the ad network business is sold at the end of the first quarter, the Company expects revenue in the range of $100 million to $110 million. The Company expects its outsourced messaging business to breakeven on an operating cash flow basis in the fourth quarter of 2001. The pro forma loss per share for the year 2001, excluding non-operating, rationalization and certain non-cash items is expected to be in the range of $1.20 to $1.30.

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