Compuserve cut its first quarter losses dramatically, sparking Wall Street hopes of a turnaround. It also announced a flat rate pricing plan in the US, a significant U-turn over previous policies, but will not introduce this in Europe.
First quarter losses were $4.1 million, less than a quarter of the $17.1 million it lost last year, and a third less than the fourth quarter deficit of $12.2 million. Revenues were $206 million. Wall Street had predicted a seven cents a share shortfall, so analysts were talking optimistically of a turnaround.
But some were concerned that the flat rate pricing would slow Compuserve's attempts to get back into profit. Previously, the online supplier had said it would not follow rivals such as America Online into offering customers a set rate for unlimited access, and even now its rate of $24.95 per month is higher than the average of $19.95 and only available in north America.
Acting chief executive Frank Salizzoni said a $20 rate would not make a profit and Compuserve felt it added sufficient value to justify the higher price.
. However, he admitted: "Because we cannot predict its impact with any certainty, this new pricing plan may affect our ability to achieve our stated goal to reach or exceed the break even point in earnings some time in the second half of the current fiscal year."
Compuserve has been forced into the flat rate route by the actions of almost all its competitors and by its steady loss of subscribers. Revenue from its main online service fell by $8 million to $124.2 million compared to the fourth quarter of last year. Worldwide subscribers now number 2.6 million, down from 2.77 million in April.
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