MessageMedia Fires 100, Says Revs Will Be Lower

E-mail marketers are proving to be no more insulated against the hostile ad spending market than their banner-centric brethren — as MessageMedia indicated on Thursday, announcing that it will cut about 100 posts domestically to shave operating expenses.

In a statement Thursday, the Superior, Colo.-based company pointed to “softening industry conditions … which [have] resulted in lower demand for the company’s services and software, and by the capital markets, which has shifted the focus of its valuation metrics from the development of market share to operating profitability.”

In late November, email marketer NetCreations echoed similar comments about the state of the industry in trending down its fourth-quarter earnings predictions, from $0.00 to $0.02 per share, to -$0.04 to -$0.06.

MessageMedia said that it expects its fourth quarter revenues to come in between $7 million and $8 million, versus the $10.2 million it reported in third quarter. It also said it would see a net loss in the fourth quarter of between $11 million and $12 million, or $0.43 to $0.44 per share, before a restructuring charge of about $1.8 million.

MessageMedia said that while its email unit will produce flat revenue from third quarter, its technology business will actually see about 70 percent, or $800,000, less revenue. The company said in its statement that this downturn is due to a lower number of contracts and the adoption of “more conservative revenue recognition policies.”

As a result of the restructuring, the company said it expects to shave $3.5 million to $4 million in future quarterly operating costs. The company also said it would cut operating expenditures and reduce investments in wireless and online customer care products.

As a result, MessageMedia said it would be earnings-positive before interest, taxes, depreciation, and amortization in the third quarter of 2001, and fully earnings positive in the following quarter. Last quarter, the company said it expected to become profitable in “mid-2001.”

At the end of third quarter, the company said it had about $22.5 million in the bank, which should be able to carry the company to its new profitability dates, assuming that revenues don’t slide any further.

At press time, shares of MESG were down 28 percent to $1.03.

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