BigStar Q3/PS Loss $0.29, Price Drops to $0.28

BigStar Entertainment, which runs online direct marketer Advaya, Friday reported net losses had narrowed to $2.9 million (or 29 cents per share) but the news did not help the company’s depressed share price, which was trading this morning at 28 cents per share.

The company attributed the improved earnings to “significantly reduced sales and marketing expenses.” After the third quarter last year, BigStar posted a net loss of $5.3 million (70 cents per share).

“The lower loss per share also reflects the additional shares outstanding as a result of the company’s initial public offering in the third quarter of 1999 and a private placement in the fourth quarter of 1999,” the company said.

BigStar has already been warned that it would be booted from the NASDAQ exchange because of a declining share price, prompting the company to retain a financial advisor to assist in “evaluating strategic opportunities” which includes the outright sale of the company.

During the third quarter, BigStar reported net revenues of $1.4 million. The income included $87,000 generated by Advaya, the company’s online direct marketing division, as well as $219,000 in advertising and promotional revenues. In the 1999 third quarter, the company reported $730,000 in advertising revenues, of which $344,000 were barter transactions.

David Friedensohn, BigStar’s CEO, was unfazed by the company’s financial struggles. “While we continue to operate in a challenging industry and market, we remain optimistic about the company’s ability to leverage its proprietary technology, both in terms of its online retail business, as well as Advaya,” he said in a statement.

“We believe we have ample capital to continue to develop shareholder value at BigStar and Advaya over the next year and we will continue to deploy that capital in a disciplined manner,” he added.

The video e-tailer has been working to shift into the direct marketing business as B2C e-commerce takes a pounding in the public markets. In April, it spun off Advaya, designed to capitalize on marketers’ growing interest in e-mail marketing and database management.

The division grew out of BigStar’s own e-mail marketing division, which it used to communicate with its customers. Advaya’s external clients include Audible and Warner Bros.

Friedensohn said at the time of the spin-off that BigStar’s technology allows Web sites to target, segment, track and report sophisticated information about their users, resulting in sales conversion results that are “significantly better than those of banner ads.”

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