Two of the nation’s top mobile content providers reported strong first-quarter results last month even as they offered differing forecasts for the second quarter.
VeriSign Inc.’s new mobile content operations helped fuel a five-fold increase in its first-quarter profits, the Internet and telecommunications networks company said April 20. The Mountain View, Calif.-based firm reported a first-quarter net income of $49 million, or 19 cents a share, compared with a $9 million, or 4 cents a share, profit last year.
Revenues from its content and services business, which includes Internet portals Jamba and Jamster, rose 50 percent to $145 million, the company said.
The first quarter was the first full reporting period for VeriSign’s mobile content business, which was acquired last year. While it has been extremely profitable, the content operation has stirred controversy on both sides of the Atlantic, with consumers lobbing charges of fraud and false advertising. The company denies the charges.
VeriSign’s Internet authentication operations were also credited for the strong performance. The company also raised its outlook for the full year, projecting $1.75 billion in revenues and a profit of $1.04 a share.
“Our first-quarter results represent a strong start to the year and an exciting beginning to our second decade as a company,” said Stratton Sclavos, VeriSign’s chief executive officer.
VeriSign shares were up 11.8 percent to $28.70 in mid-day trading on the Nasdaq exchange Thursday.
Meanwhile, shares of InfoSpace Inc. slid more than 25 percent and analysts downgraded the stock after the Web search and mobile content company issued a disappointing second-quarter forecast.
InfoSpace reported first-quarter revenues of $87 million, up 81 percent from last year’s first-quarter revenues of $48.1 million. The company also reported net income for the quarter at $93.9 million, or $2.53 per share, more than doubling 2004 figures of $36.7 million, or $1.03 per diluted share. Part of the reason for the large income amount was the successful settlement in the quarter from a lawsuit against the founder.
The company’s second-quarter outlook was well below expectations, as InfoSpace projected revenues of $83 million to $85 million, or 36 cents to 39 cents per share-about 5 cents per share less than analysts had expected. Financial research firms First Albany, Oppenheimer and Raymond James each downgraded the stock, with First Albany and Oppenheimer moving from “buy” recommendations to “neutral.”
Albert Lin, director of research at American Technology Research, said InfoSpace’s disappointing forecast in part may be due to carriers’ efforts to curtail “overly aggressive” marketing efforts by content providers such as InfoSpace and VeriSign.
“While we see a healthy growth industry remaining after this examination,” Lin wrote, “we believe that segment of the industry will experience a slowdown, which may feel like a train wreck compared with the recent months of hyper-growth. INSP (InfoSpace) and VRSN (VeriSign) are considered two of the leading companies in the area and may be impacted no matter what they do.”
Shares of InfoSpace, which have ranged from $26.50 to $57.92 in the last year, dipped $11.53 to $33.46 in mid-day trading on the Nasdaq Wednesday. RCR
