Loss, Outlook Send Engage Lower

Engage, Inc. (Nasdaq: ENGA) was down 27/64 at 1 35/64 early Wednesday after the company, which makes software for the online advertising industry, missed analysts' estimates for the quarter ended October 31st, and said it is reviewing its targets for the current fiscal year.

The Andover, Massachusetts-based company, an operating subsidiary of CMGI, Inc. (Nasdaq: CMGI), said revenue for the fiscal first quarter was US$41 million, up 105 percent from a year earlier but down 38 percent from the fourth quarter.

The loss before extraordinary items widened to $48.7 million, or 26 cents per share, from $23.9 million, or 14 cents, in the year-earlier quarter. Company officials had predicted a loss of 25 cents per share. The net loss for the quarter was $173.8 million, or 92 cents per share, compared with a loss of $112.3 million, or 64 cents, in the fourth quarter.

The company blamed the shortfall on a weak market for online advertising, with "additional bad-debt expense" cutting into results as some customers became "increasingly less financially stable" during the quarter.

Tony Nuzzo, who recently took over as president and chief executive officer, hinted at a restructuring. "Clearly, we are very disappointed in the results for the first quarter," Nuzzo said. "In order to improve the financial health of Engage in this tough market, significant changes will be made in the short term."

Nuzzo said the company will detail its plan for creating a "simpler, more efficient company" within the next few weeks. The focus will be on achieving breakeven -- before restructuring and other charges -- by the end of the fiscal year.

Engage said it is reviewing its targets for financial performance in fiscal 2001, and expects to lower its expectations for revenue and operating results.