Critical Path Sees Narrower Loss in First Quarter
It attributed its improving financial situation to cost-cutting measures and an increase in hosted messaging revenue.
The San Francisco company said its net revenue in the first quarter rose slightly to $27.1 million, from $24.5 million in the same quarter in 2000. However, its net revenue was down 35.8 percent from $42.3 million posted in fourth quarter 2000. Hosted messaging revenue rose to $14.5 million in the quarter, from $9.1 million a year ago.
"During the quarter we continued to see solid revenue from our hosted messaging services, although decreased from comparable levels in the fourth quarter of 2000," said Larry Reinhold, Critical Path's chief financial officer. "The decrease was primarily due to one significant customer reducing its utilization of our hosted services as it explores an insourced solution, a decline in revenues from our fax services and our decision to exit certain other unprofitable hosted relationships."
Critical Path said it had $171.6 million in cash and equivalents at the end of the first quarter.
The company announced in April that it was refocusing its business to concentrate on its core e-mail messaging services and that 450 employees, or 43 percent of its staff, would be laid off. At its height, Critical Path employed 1,050 people.
The changes came as the company faces numerous class-action lawsuits stemming from its announcement Feb. 2 that its accounting practices "put into question" its fourth-quarter 2000 financial results. It also faces an investigation by the Securities and Exchange Commission.
Critical Path said earlier this year that its previous management team had reported $13.4 million in sales that either never occurred or should have been recorded as revenue. An additional $5.9 million in revenue was taken off Critical Path's books and may be recorded in future quarters. The company reported a $1.85 billion loss for 2000.