RealTime IT News

Digital River Lowers Guidance

E-commerce outsourcer Digital River Inc. revised its first quarter guidance downward, from 7 cents a share to 1 to 2 cents a share on a pro forma basis.

The Minneapolis-based company said that it expects revenue for the first quarter to be approximately $18 million, lower than the company's previous guidance of $19.4 million.

The dip in revenue is "... related to the slower than anticipated growth in IT spending levels in this economic environment and the impact of lower seasonal software product sales," said Joel Ronning, Digital River's chief executive officer.

The company said it also anticipates a $2.3 million charge for a reserve established for pending litigation, as well as a $200,000 charge in connection with the consolidation of Digital River's San Jose operation. Including these charges, the loss per share, prior to the amortization of acquisition-related expenses, is expected to be 7 to 8 cents.

The company said it expects full year 2002 revenue to total $70 million to $73 million. This represents a 21 to 26 percent increase from the prior year, but is lower than its earlier expectations.

Digital River, which provides e-commerce outsourcing solutions to software publishers and online retailers, has seen its revenues rise steadily, but has never made any money. For all of 2001, it lost 81 cents a share.

Pro forma earnings per share for 2002, prior to the amortization of acquisition-related expenses and the previously mentioned charges, are expected to be in the range of 20 to 22 cents a share, the company said.

"While our sales pipeline is strong for both of our divisions, we continue to see longer sales cycles and we believe that prospective clients are postponing their investment commitments until they see a stabilization of the economy," Ronning said.

The revised guidance for the full year includes the recently completed acquisition of CCNow.com, from Innuity Inc., but does not include anything related to the acquisition of certain assets from Beyond.com.