January 20, 1998 2:55 PM PST
Spyglass on track to break even
The company today reported a loss of $3.6 million, or 28 cents per share, for its first quarter ended December 31, 1997, compared with a loss of $1.5 million, or 12 cents per share, a year ago. The good news is that Spyglass beat Wall Street estimates, which pegged the company's quarterly loss at 32 cents per share, according to a First Call consensus estimate.
Spyglass' revenues for the quarter rose to $4.3 million, compared with $3.9 million reported for the same period last year.
The company, which builds Net filtering and Web access software, said the loss includes a charge of $496,000 for the acquisition of AllPen Software in November, 1997. Spyglass acquired AllPen, a privately held systems integration and software development firm focused on Internet technology for non-PC devices, in an effort to boost its Internet expertise and customer base.
Based on the better-than-expected earnings news, investment banking firm Nesbitt Burns raised its rating on Spyglass to "attractive" from "neutral."
In a report issued today, the firm said it expects Spyglass to break even around year's end, well ahead of earlier projections of September 1999. The firm also said that Spyglass is successfully growing its services revenue, and that its strategy of partnering with various hardware makers to embed Internet technologies inside access devices is paying off.
Last October, the company warned of more losses ahead as it continued expanding its business and investing in research and development. Spyglass said it will continue to invest in its overall operations--specifically in product development and international operations--in order to take advantage of market opportunities. The company noted that it also will consider acquisitions.
Spyglass' continued focus on the Web-enabled device market may continue to put downward pressure on revenue and net income during fiscal 1998, the company warned, saying that it needs to give up a near-term return to profitability in order to focus on long-term potential.
Last year Spyglass began shifting its focus away from building Web browsers and toward investing in Internet devices. The company now builds the software that goes inside Internet devices in order to make them Web-enabled.
Spyglass also sells filtering software called SurfWatch.