Prodigy Communications Corp reported its first set of results since going public last month and although they show that having finally switched the company’s focus to the internet – as opposed to its proprietary online service – appears to be paying off, it has a long way to go to get back the big league status it had in the late 1980s, before the web changed business forever.
The White Plains, New York-based firm had two main businesses for the reporting period: Prodigy Internet and Prodigy Classic – the web and proprietary services, respectively. The former has now completely overtaken the latter, and Prodigy discontinued Classic earlier this year. As of December 31 1998, Prodigy Internet had 505,000 paying subscribers, up from 221,000 12 months earlier. About 6% of those were migrants from Classic to Internet. During the fourth quarter, internet accounted for 72% of revenues and 59% for the year. The IPO in February raised $168m before expenses for the company, so life should get interesting from here on in.
Net losses for the fourth quarter were $17.2m, or $0.38 per share, down from $49.3m, which included a $5.8m restructuring charge. That’s a couple of cents inside First Call’s average estimate, but just two brokers currently following the company were surveyed. Revenues in the quarter rose 7.3% to $24.8m. Prodigy’s costs are obviously high, but they are less than they used to be due to its outsourcing of its network and much of its content work to Texas-based SplitRock Services Inc and Excite Inc in 1997 and 1998, respectively. The other strand of Prodigy’s business, which was introduced in January, is Prodigy business solutions, which offers hosting and other IP-based services. Cash at the end of December stood at $12.1m.
