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United Online’s Sales Surge 45%

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From Bloomberg News

United Online Inc., owner of the Juno, NetZero and BlueLight Internet-access services, on Wednesday posted a fiscal third-quarter profit of $6.96 million after signing up 229,000 new paying subscribers. The company’s shares rose 8.5%.

Net income was 15 cents a share, contrasted with a net loss of $7.25 million, or 19 cents, a year earlier, the company said. Revenue in the quarter ended March 31 jumped 45% to $73.8 million from $50.9 million.

United Online has been taking customers from rivals including AOL Time Warner Inc.’s America Online service by charging $9.95 a month for Internet access, less than half of America Online’s monthly rate. America Online, the world’s largest Internet service, has lost U.S. subscribers in the last two quarters.

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“They’ve cut costs to where they can make a profit at a very low level of revenue,” said Frank Husic, managing partner at Husic Capital Management in San Francisco. “They’re going to continue to win at the expense of AOL and the others.” Husic Capital held 1.58 million United Online shares in December.

America Online spokesman Jim Whitney declined to comment.

Shares of United Online rose $1.76 to $22.36 in Nasdaq trading after earlier setting a two-year high of $22.80. The stock has more than doubled in the last year.

The Westlake Village-based company had forecast in February that its net income wouldn’t exceed $5.4 million, or 12 cents a share, and that it would add no more than 150,000 paying subscribers in the quarter.

The company ended the quarter with 2.4 million paying subscribers, up 51% from a year earlier.

United Online said it expects to generate earnings before interest, taxes, depreciation and amortization, or EBITDA, of up to $14 million in the fiscal fourth quarter.

Previously, the company was expected to earn $12.6 million on that basis, according to the average estimate of three analysts surveyed by Thomson Financial.

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