Earnings Winners Abound
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With much of the quarterly earnings season behind us, now might be a good time to take a look at some of the big winners so far.
Among the winners this quarter are a number of companies offering e-commerce software and services. The triple-digit revenue growth many of them are experiencing indicate the market's bullishness toward that sector is justified.
Also benefiting from strong revenue growth - and profitability - are several Web consulting and design companies.
Let's look at some of the recent quarter's stars, as chosen by the market:
AOL continues to beat increasingly heightened street estimates. Since releasing earnings report early Wednesday, AOL shares were up 7% through early Friday afternoon, trading at 123 5/16.
Art Technology Group (ARTG): Save for a brief stumble earlier this month, this provider of e-commerce software and services has been one of the hottest stocks on the Nasdaq ticker in recent weeks. It got hotter on Thursday when it released Q3 results showing $8.1 million in revenues, a 131% increase in revenues over the comparable quarter in '98. Sales were up 31% over Q2, and gross margin inched up to 68% from 66% in Q3 last year. However, net loss widened from $441,000 (2 cents per share) in last year's Q3 to $1.4 million (5 cents a share) this year. Over nine months this year, revenue is up 127% over last year.
ARTG shares closed at $48 on Wednesday, and then began a run-up in anticipation of Thursday's earnings report. Shares were trading at $63 early Friday afternoon, up 31% over Wednesday's close.
Braun Consulting (BRNC): With one foot in the e-commerce solutions market and the other in Web consulting, Braun straddles two hot sectors. As of Friday afternoon, BRNC share price had doubled to 27 < since Monday's close, thanks to an earnings report released Tuesday that showed $12.1 million in revenue for Q3. Compared to Q3 '98, that's only a 68% increase, but operating income was up 164%, and pro forma net income was $932,000, or 6 cents per share.
Razorfish (RAZF): Trading at 60 > early Friday afternoon, Web consulting and services company Razorfish was up 17% from Tuesday's close after beating analysts' estimates with its quarterly earnings report released after trading hours that day. The company had net income of $913,000, or 4 cents per share, exceeding the consensus estimate of 3 cents per share.
WebTrends (WEBT): WebTrends on Monday reported Q3 earnings of $5.3 million, an increase of 152% over last year's third quarter. Net income rose nearly 1600% to $878,000. The company, which makes enterprise management and analysis software, saw its stock price rise from last Friday's close of 38-1/4 to trade at 50-1/8 Friday afternoon. That's a 31% increase.
There are many more earnings winners this quarter, along with some losers (which I'll discuss Monday).
Overall, though, the recent quarterly results are strong evidence that the Internet economy is rapidly maturing, growing its infrastructure and further positioning itself to realize the potential that has attracted billions in private and public investment dollars in recent years. And despite occasional bumps and corrections, the market will continue to recognize and reward this economic revolution.
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