Earnings Winners Abound

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

America Online (AOL): I wrote about AOL in depth Thursday, so I won’t go
into great detail. But in its first quarter, ended Sept. 30, AOL had
revenues of $1.47 billion, an increase of 47% over last year’s first
quarter. Net income of $184 million (15 cents per share) was nearly four
times last year’s Q1 net income of 4 cents per share.

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

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%

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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