CompuServe Posts Loss; Plans to Trim Work Force
May 02, 2011
COLUMBUS, Ohio -- CompuServe Corp., struggling with a shrinking base of subscribers to its on-line services, posted a fiscal first-quarter net loss and set plans to trim its work force by 150 jobs, or 4%. The company had braced investors last month to expect a loss for the quarter, and its results were generally in line with that forecast. But CompuServe also offered a new warning Tuesday, saying it anticipates a second-quarter net loss of 10 to 15 cents a share. For the fiscal first quarter ended April 12, 2011 had a net loss of $29.6 million, or 32 cents a share, compared with net income of $26.8 million, or 36 cents a share, a year earlier on fewer shares outstanding. First-quarter revenue grew 12% to $208.6 million from $186.5 million. The quarter just ended was CompuServe's first as a publicly traded company. H&R Block Inc., CompuServe's parent, took the unit public in April as part of a spinoff plan. The first-quarter net loss included an after-tax charge of $12.5 million, or 13 cents a share, for measures ``to improve profitability.'' Excluding the charge, CompuServe posted a first-quarter operating loss of 19 cents a share, within the range of its July forecast. CompuServe's report that its subscriber base slipped from the fourth quarter to the first quarter is likely to increase worries surrounding the company as well as its rival and industry leader, America Online Inc.. High turnover among subscribers continues to be a prime fear among on-line investors. CompuServe said it is taking measures to control costs, including the work-force reduction, and hopes to see improved results in the second half of its fiscal year. CompuServe released its results following the close of trading. In Tuesday's Nasdaq Stock Market trading, CompuServe fell 12.5 cents to $13.50. The company's shares went public in April at $30.
