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COLUMBUS, Ohio, June 18 /PRNewswire/ -- CompuServe Corporation (Nasdaq:CSRV) today
reported a $.13 loss per share for the fourth quarter ended April 30, 1997, before pre-tax special
charges of $9.2 million ($5.8 million after taxes, or $.06 per share), on revenues of $208 million. A
lower effective tax rate reduced the recorded tax benefits and contributed $.03 per share to the
fourth-quarter loss. The total fourth-quarter loss of $.19 per share compares with the third-quarter
loss of $.15 per share on revenues of $211 million. In the prior-year fourth quarter, the company
lost $.02 per share on revenues of $215 million.

The one-time special charges related to a further consolidation of Columbus-area office facilities
and the sale or write-down of certain equity investments in providers of content and technologies.
Of the $9.2 million charge, $7.4 million represented non-cash write-downs.

Earnings before interest, taxes, depreciation and amortization (EBITDA), and non-cash special
charges, improved to $12.8 million, versus $9.4 million in the third quarter. The improvement was
driven by a four percentage-point increase in gross margin, from 36 percent in the third quarter to
40 percent in the most recent quarter. This marked the second successive quarter of positive
operational cash flows.

For the fiscal year ended April 30, 1997, CompuServe lost $119.8 million, or $1.29 per share, on
revenues of $842 million. This compares with earnings for the prior fiscal year of $49.1 million, or
$.66 per share, on revenues of $793 million.

``Our fourth-quarter results were encouraging in some respects and disappointing in others,' said
Frank L. Salizzoni, CompuServe chairman and acting CEO. ``Overall, we made progress toward
our goal of stabilizing earnings and returning CompuServe to profitability. We expect further
improvement in earnings and cash flows, our goal being to reach or exceed the breakeven point in
earnings sometime in the second half of the current 1998 fiscal year.'

Salizzoni said the continued decline in U.S. subscribers to the company's CompuServe Interactive
online/Internet service, and the resulting impact on fourth-quarter revenues, were disappointing.
``The decline in our CompuServe Interactive subscriber base was due in part to the reduction of
U.S. direct marketing during the quarter. We used this period to reshape marketing programs to
target business, professional, technical and other sophisticated consumers in the U.S. We increased
U.S. direct marketing in May,' he said.

``On the encouraging side, improved management of our cost structure resulted in higher gross
margin and positive operational cash flows,' Salizzoni said. ``This creates a stronger foundation for
progress as we re-engage our U.S. marketing efforts.'

Network Services

CompuServe Network Services added a net 49 corporate customers during the quarter, including
23 in April, to bring the division's customer total to 1,200 for complete, fully integrated Internet,
Intranet, and Extranet connectivity solutions. Revenues from Network Services grew 27 percent
over the same quarter last year to $69.5 million, representing 33 percent of the company's total.

In fiscal year 1997, Network Services added 234 customers and contributed revenues of $257.6
million, up 30 percent over the $198.8 million figure for the prior fiscal year.

After the close of the fourth quarter, Network Services signed a five-year renewal contract valued
in excess of $100 million with Vital Processing Services, a joint venture between long-standing
customer VISA(R) U.S.A. and Total System Services, Inc.(SM). In addition, Network Services
announced the opening of its first office in Mexico to serve existing and new customers, as well as
strategic alliances that expand its value-added network services into attractive new markets
including Vietnam, Singapore and Argentina. Through alliances with local partners, CompuServe
Network Services is aggressively extending its global reach. The division expects to announce its
entry into other high-potential international markets in coming months.

Interactive Services

Revenues declined to $132.6 million from the third-quarter figure of $138.5 million, due in part to
the reduction of U.S. direct marketing for CompuServe Interactive during the fourth quarter. The
reduced U.S. direct marketing also decreased CompuServe Interactive monthly revenue per
member to $14.82 in the quarter, as a higher percentage of new members subscribed through
OEM channels. Members joining CompuServe Interactive from OEM channels typically spend less
time online than those brought in by the company's direct marketing programs.

As of April 30, 1997, CompuServe had 5,373,000 direct and licensed subscribers, up from
5,341,000 as of January 31, 1997. Global subscribers to the company's CompuServe Interactive
online service declined to 2,767,000 at the end of the quarter from 2,892,000 at the third-quarter
close, as the U.S. acquisition efforts were curtailed.

CompuServe Interactive subscribers in the U.S. declined 127,000 to 1,527,000, compared with
1,654 ,000 at the end of the third quarter.

European CompuServe Interactive subscribers grew to 892,000, up 19,000 from the prior
quarter's 873,000 figure, maintaining CompuServe Interactive's substantial lead among global online
services in Europe. CompuServe Interactive subscribers in other international geographies totaled
348,000, down 17,000 from 365,000 at the end of the third quarter.

SPRYNET, CompuServe's Internet-only access service, continued to grow with 280,000
subscribers at the end of this quarter, versus 270,000 for the previous quarter.

CompuServe's Japanese licensee, NIFTY, continued growth with 2,326,000 subscribers at the end
of the quarter, up from 2,179,000 at the end of the third quarter.


During the fourth quarter, CompuServe Interactive with the new CompuServe 3.0 software
interface introduced in fall 1996 received PC Magazine's Editors' Choice award as the best online
service. NetGuide magazine voted CompuServe Interactive the best online service for business
information. CompuServe Interactive was also rated the top online service for reliable access in
independent tests conducted by Inverse. CompuServe Network Services was rated the top new
international carrier in a Communications Week International business user survey.

Strategy Progress

``Our strategy is to aggressively manage costs while building on CompuServe's strengths -- our
global network and Network Services business; our leadership position in Europe and other
international markets; our SPRYNET Internet access service; and, very importantly, our strong
following among people whose needs are not adequately met by mass-consumer online services,'
Salizzoni said.

``We believe the U.S. online/Internet market has reached the stage where one-size-fits-all
approaches will become more difficult to sustain and successful segmentation will be rewarded.
CompuServe is taking this step by focusing on more sophisticated and demanding U.S.
consumers,' he said. ``Historically, this attractive segment has been our stronghold, but until now
we were not focusing sharply on it.'

During the fourth quarter, CompuServe:

Announced the worldwide upgrade of its network access speed to 33.6 kilobits-per-second
from 28.8Kpbs, and also began offering 56Kbps and ISDN access throughout the U.S., and
ISDN access in 25 major international locations.
Activated a state-of-the-art data center facility, using the Microsoft Commercial Internet
System (``Normandy') architecture, that allows CompuServe Interactive subscribers to get
to CompuServe's data center or the Internet up to 50 percent faster than before, and to post
or retrieve information up to 10 times faster than before.
Launched, in Europe, its first business and consumer offerings based on Internet (HTML)
standards and accessible by anyone using the Internet. As previously announced,
CompuServe plans to introduce Web-based products and services in the U.S. and Europe
by the end of calendar-year 1997, while continuing to enhance the company's proprietary
CompuServe Interactive online service and global network.
Entered a strategic alliance in Germany that enables Internet access provider's
160,000 subscribers to access CompuServe Interactive content for an additional monthly

Since the end of the fourth quarter, the company announced that it reshaped the CompuServe
Interactive service in the U.S. to meet the requirements of more sophisticated online users, by
organizing more than 3,000 content areas and capabilities into 21 communities including Business,
Professions, News, Investing, Travel, Shopping and others. CompuServe also launched a U.S.
marketing campaign with a direct mail effort to 4 million current and prospective users, to be
followed starting in late June with national advertising.

Founded in 1969, CompuServe Incorporated provides the world's most comprehensive
online/Internet access through its two brands, CompuServe Interactive and SPRYNET. Through
CompuServe, its Japanese licensee NIFTY- Serve and its affiliates around the world, more than 5
million home and business users in more than 185 countries are connected online and to the
Internet. CompuServe Network Services, a leading network integrator, provides more than 1,200
companies around the world with complete, fully integrated, Internet, Intranet, and Extranet
connectivity solutions. With world headquarters in Columbus, Ohio, the CompuServe organization
includes offices in the United Kingdom, Germany, France, Switzerland and the Netherlands.

Except for historical information contained herein, the matters set forth in this press release are
forward-looking statements that are subject to risks and uncertainty which could cause actual
results to differ materially. CompuServe cannot assure, for example, that its strategy and related
marketing programs will produce the anticipated results, or that earnings will continue to improve
and reach or exceed the breakeven point during the 1998 fiscal year.
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