USi Meets Estimates, Announces Layoffs

USinternetworking Inc. this week announced that it beat analyst estimates with $36.7 million Q1 revenues and a $0.33 net loss, and will undertake a 20- to 25-percent workforce reduction and cost-cutting measures expected to save the Annapolis, Md.-based ASP $35 million.

“Our continuing penetration of new enterprise clients, as well as success in expanding services sold to existing clients, demonstrates the increasing acceptance of the ASP model and of USi’s industry leadership,” said CEO Andrew A. Stern. “The quality of our service delivery has never been higher, while the refinements we have made in our business over the past several quarters are paying off in increased efficiency.”

During the first quarter, USi signed new enterprise clients Coors Brewing Company, Merchant’s Tire & Auto Centers, Air Cargo Inc. and the Arthritis Foundation. The company was also one of the first ASPs to achieve Microsoft Gold Certified Partner status for Hosting and Applications Services, and is the only company in the world with multiple certifications.

“We are not immune to the conditions affecting virtually everyone in the technology industry,” said Stern. “It is clear that broad macro-economic conditions are having an effect on our top-line growth rate. We are adjusting our growth expectations accordingly, and taking measures which should enable us to achieve our objective of EBITDA breakeven in the third quarter.”

These steps include a consolidation of business units, a 20- to 25-percent workforce reduction and cost-cutting measures expected to save the Annapolis, Md.-based ASP $35 million..

“In designing these actions, we have taken great care to ensure that we will not compromise client service, which is currently at the highest level in USi’s history,” said Stern. “Accordingly, we remain absolutely confident of our long-term growth opportunities.”

The company expects revenue for the second quarter of 2001 to be approximately $34 million, essentially flat with the first quarter of 2001 before termination fees. Revenue for 2001 is expected to be $150 million, a 37-percent increase over 2000. The company expects to report loss per share for the second quarter of 2001 in the range of $.33 to $.35 per share. For the full year, the expected loss per share is in the range of $1.22 to $1.27.

Enterprise ASP Corio this week posted Q1 revenues up 157 percent over Q1 2000 to $13.6 million, and an operating loss of $0.33 per share.

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