Netcentives Sees Widened Loss But Tops Estimates

Online incentive marketer Netcentives said Tuesday that its losses have widened, but the San Francisco-based firm still beat Wall Street forecasts for its fourth-quarter performance.

Netcentives posted a quarterly loss of $17.8 million, or $0.42 cents per share, on revenues of $17.4 million.

The revenues are also 47 percent above third quarter revenues — something of a feat considering the weak online marketing spending environment plaguing many of its competitors.

According to First Call/Thomson Financial, analyst consensus pegged Netcentives to post a loss of $0.49 cents per share on $13.6 million in revenue.

Netcentives isn’t totally isolated from the downturn on online ad spending — its loss is almost twice its $9.5 million loss in the fourth quarter of 1999, although revenues have grown nearly six times since then. The loss also doesn’t take into account a non-cash charge of $66.7 million.

For the full year, Netcentives pulled in total revenue of $42.9 million, and posted a loss of $58.9 million, or $1.50 per share. Analysts expected the firm to post a loss of about $1.57 per share.

Last year, Netcentives posted a pre-charges loss of $32.4 million, or $1.35 per share.

“Our exceptional growth throughout 2000, and in particular the fourth quarter, highlights the fact that our business continues to strengthen and diversify,” said chairman and chief executive officer West Shell. “During the fourth quarter, we benefited from strong seasonal momentum as our loyalty and email platforms enabled our clients to successfully attract and retain their most valuable audiences during the holidays.

Netcentives also said it had a “strong” outlook for 2001, but declined to break out particulars.

“To succeed in this economy, every company needs to maximize the value of their customer, employee and business relationships,” Shell said. “This is not a discretionary item such as advertising. Netcentives’ proven model and technology is fast becoming the industry standard, and … we continued to strengthen our business.”

The firm reported that it ended 2000 with cash and short-term investments of $43.3 million, and that it remains on track to begin turning an operational profit in fourth quarter, 2001.

Despite the widening losses, Netcentive’s performance is still largely positive, following a steady stream of bad news from other players in the online incentive marketing sector during the past few months.

Fourth quarter saw the departure of MyPoints.com’s CEO and chief operating officer, the cutting of 120 jobs, and a warning in January that the firm expects to see wider-than-expected losses for the quarter. And in a related field, online couponer Coolsavings.com said last week that it would trim 10 percent of its staff in an effort to cut costs.

At press time, shares of NCNT were trading up 3.25 percent, at $5.00.

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