The short love affair the city had with Freeserve appears to be over, according to analysts.
“It is now seen more realistically in light of the universal climate of fretfulness facing Internet plays around the world, commented Miles Saltiel, senior analyst at brokers West LB Panmure. Some city watchers believe shares could go to 60p. They have been hovering around the 135p mark for some days.
There is a possibility that Freeseve’s declining share price may eventually begin to influence operations, by compromising the negotiability of the shares as a currency for corporate transactions, according to Saltiel.
Freeserve’s first quarter results were in line with signals last week. Turnover stood at £3.38 million and operating costs at £8.6 million.
Freeserve’s subscriptions are recovering, but they are still not as high as at the end of May. Freeserve is putting this down to seasonality.
Analysts believe Freeserve has seven quarters to get its house in order.
“At the current burn rate before Freeserve has to either reduce spend, bring in revenues, or return to the market - the heat is on,” said Saltiel.
Freeserve’s battle is now on to win subscribers. It is fighting this on telephone charge access, but analysts maintain its system is too complex and requires access codes which consumers in general do not like. Meanwile AOL is offering a penny a minute scheme that Saltiel said is “easy to understand and hard to beat”.
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