RealTime IT News

Cheaper Access = United Online Profit

United Online , which offers $9.95 a month online services, roped in 229,000 new dial-up subscribers during its fiscal third-quarter which helped it boost revenues by 45 percent and build a record profit.

The results were a stark contrast to United's higher-priced narrowband rivals, notably AOL , Microsoft's MSN and Earthlink , all of which have notched two quarters of declining subscribers who have largely switched over to broadband.

United Online, which operates the free or low-cost Juno, NetZero and Bluelight.com ISP brands, said its profit for the quarter ending March 31 was $7 million (15 cents per share). During the same quarter last year, United Online lost $7.3 million (19 cents per share).

Revenues jumped by 45 percent to $73.8 million compared to $50.9 million in revenues during the same, year-ago period.

The new subscribers during the quarter bring UNTD's overall tally to 2.4 million, which also represents a 51 percent jump over its subscriber base over the past 12 months. Counting subscribers still hanging on to its free services, UNTD counts 5.2 million in its base overall.

Based on the strength of its cheaper monthly service, United Online also boosted its outlook for the current quarter, saying it expects to being in cash earnings of between $14 million and $14.8 million as of the end of June. Subscribers are expected to grow by another 100,000 to 120,000 during that period.

The improved outlook is built on the company's optimism for continued growth in the low-price ISP segment, a sub-sector of the access market that analysts have pegged for modest growth. United Online has already positioned products to the lower-priced segment, such as its NetZero and Juno Platinum Internet access services ($9.95) for Mac users, which it launched in March.

Earlier this month, United Online launched a dial-up service with compression features that help the user experience surfing at faster rates that traditional dial-up speeds. The NetZero HiSpeed service and Juno SpeedBand services are being marketed at $14.95 a month.

Earthlink has also introduced a mid-priced dial-up service that improves the surfing experience. The EarthLink Plus service costs $28.95 per month, $7 more than standard dial-up price.