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The Kelsey Report® Advisory

Switchboard Survives Tough Fourth Quarter for Dot-Coms
Carlotta Mast , 2/21/2001

Issue: Switchboard's Revenue Grows to $6 Million in Fourth Quarter

News: Switchboard Inc. released its fourth-quarter and year-end 2000 financial results earlier this month. Revenue growth was flat compared to previous quarters and the company continued to lose money throughout 2000. Nonetheless, the company's long-term outlook is quite good. The key reason is Switchboard's movement away from merchant aggregation to an emphasis on its directory technology and merchant services.

Switchboard's revenue for the fourth quarter grew to approximately $6 million, an increase of 98 percent over the fourth quarter of 1999. For the 2000 fiscal year, Switchboard's revenue rose to $20.3 million, up 145 percent from the $8.3 million in revenue earned the previous year. Of the $6.0 million in revenue raised during the fourth quarter, 58 percent came from advertising, 24 percent from merchant services and 18 percent from syndication and licensing.

The company posted a fourth-quarter net loss of approximately $4.7 million or $0.19 per share pro forma. A sizable portion of that was from a non-cash equity investment loss and non-cash advertising and promotion expenditures to CBS. If those charges are removed, Switchboard's net loss was $0.07 per share pro forma. The company's net loss for the fourth quarter of 1999 was $5.8 million or $0.32 per share pro forma.

The company ended the year with more than $70 million in cash and marketable securities stashed in its war chest.

"We are a healthy company on a clear path to profitability," Switchboard Chief Executive Officer Douglas Greenlaw told analysts after the company's earnings were released. He said the company expects to achieve positive cash flow by midyear and profitability by the end of 2001. "And we expect to have a low burn rate on the way to profits," Greenlaw added.

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