24/7 Beats Street, Pulls Out of Latin America
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Online ad network 24/7 Media reported its first quarter results Tuesday, posting a loss that beat Wall Street estimates but reiterating that the firm's management still has far to go, and will continue cutting costs wherever it can.
One of those cost-cutting moves will be in Latin America, where the company is closing media sales offices in Mexico, Chile, Argentina and Brazil. It's also shuttering its Miami unit, which focuses on Latin American sales.
During a conference call with analysts, chief operating officer Tony Plesner said the actions would shave about $3 million from the company's expenses going forward.
"24/7 Media grew into a global company very quickly, and like all the facets of our business, we are currently assessing the viability of each of our international operations," Plesner said. "Due to underperforming markets, and a longer timeline for recovery than was first expected, we have taken the decision to close our Latin American operation."
To date, the company's restructuring efforts have produced annualized savings of $50 million. Twelve million of that comes from the 415 employees 24/7 Media has shed since November, and $11 million is due to savings from the recent sales of its AwardTrack and Sabela Media units.
As a result, the company's bottom line showed some signs of getting healthier in first quarter -- though 24/7 Media remains a heavy bleeder.
On revenue of $25.3 million, the Alley-based company reported a before-charges loss of $24.8 million, or $0.58 per share -- two cents better than analyst consensus, according to Thomson Financial/First Call estimates.
While overall revenue slipped, the company managed to narrowed its losses. First quarter revenue fell some $13.3 million from the previous quarter, when the company posted a pro forma loss of $31.7 million, or $0.75 per share.
Including one-time charges -- related to goodwill and impairment write-downs and restructuring costs -- the company posted a sizable net loss of $78.7 million. That's still better than last quarter's $677.1 million net loss, which included massive write-downs related to impairment.
In addition to the cost-cutting, 24/7 Media said it's raised money through the sale of its equity positions, which netted about $6 million in cash. The sale of the company's AwardTrack and Sabela Media divisions also netted about $5.5 million in proceeds, although it originally paid about $75 million for each in 2000.
Plesner reiterated that more cost-cutting was to come, potentially from the company's European unit.
"In Europe, though there's still considerable demand for online advertising and marketing, our European operations are now experiencing some of the same marketplace challenges that the U.S. has faced over the past nine months," Plesner said. "Consequently, we are taking the same streamlining actions in Europe that we have in the U.S. We will continue to evaluate our strategic options in that region over the next quarter."
"There is still much that we can and will do to ensure that we will continue to vigorously compete in our marketplace," he added.
Chief executive David Moore chimed in on the call as well, saying he was pleased with the company's progress in restructuring, which should help it through an expected nine to 12 months of continuing market softness, and to hit a projected fourth quarter break-even.