Online promotions and direct marketing infrastructure company e-centives Inc. recently announced a $6.4 million net loss for the fourth quarter of 2000 and said the slowing economy may prevent it from meeting Wall Street’s 2001 revenue expectations.
The loss was $500,000 less than e-centives’ $6.9 million loss for the fourth quarter of 2000, and nearly $3 million under its third quarter loss.
E-centives reported a $29.9 million total loss for 2000 against revenue of $10.2 million. Loss and revenue totals for 1999 were $16.2 million and $740,000 respectively.
Revenue growth in 2000 represents a 1,282 percent increase from 1999, company officials said.
E-centives, an application service provider, licenses its database-building online promotion technologies to companies trying to gather consumer data through Internet sweepstakes, printable coupons and other Internet promotion efforts.
“The fourth quarter was difficult, but we were able to accommodate the overall slowdown in online advertising and marketing and still perform against our business plan,” said Kamran Amjadi, chairman and CEO, e-centives, Bethesda, MD.
But if current Internet advertising market trends continue, things will get even more difficult, so e-centives chief financial officer Mike Sullivan said “a lower  revenue forecast for the advertising-based portion of our business [is] more prudent at this time.”
The company now expects $22.5 million in revenue from its core business in 2001, compared to the $29 to $31 million that analysts forecast.
Total 2001 operating costs are expected to reach $62.5 million. This includes the projected $17 million cost of integrating and operating Inktomi Corp.’s Commerce Business. Inktomi late last year transferred employees, equipment and technology from its commerce division to e-centives for 19.9 percent of e-centives’ outstanding shares of common stock.
E-centives lowered the estimated 2001 operating cost of its core business 12 percent from just over $50 million to about $45 million. This is due in part to the scaling back of large branding campaigns and the end of its legal battle with online promotions company CoolSavings.com. Patent infringement litigation with CoolSavings ended in September, with both companies agreeing to pay licensing fees. “Our legal fees are a fraction of what they once were,” because of the agreement, Sullivan said.
A long-term acquisition effort through Internet portal Excite.com continued reaping rewards in the fourth quarter of 2000. E-centives reported a 70 percent jump from 4.5 million members in the third quarter to 7.5 million members in the fourth quarter. E-centives said it depends on its membership base to attract advertisers and to generate a significant revenue stream.
New employee growth will be significantly trimmed this year. Growth will be focused on the company’s sales and engineering departments, as opposed to human resources, finance and legal departments. HR, finance and legal departments were bolstered last year to prepare for e-centives’ initial public stock offering on the SWX New Market in Switzerland, Sullivan said.
E-centives launched its primary listing in October on the SWX to avoid the mosh pit like conditions pounding the tech heavy Nasdaq. Its IPO of 3.7 million shares was worth about $42 million American dollars, or $11.25 per share.
E-centives stock was up about 12 percent Tuesday, but was still trading at under $7 per share, down almost 18 percent from the previous month.