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CompuServe losses mount
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November 20, 1997: 10:27 a.m. ET
Fiscal second-quarter loss is triple expectations due to one-time charge
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NEW YORK (CNNfn) - Online service provider CompuServe Corp. announced fiscal second-quarter losses Thursday that were triple what Wall Street had predicted.
CompuServe posted a loss of $13.5 million, or 15 cents per share, for the quarter ended Oct. 31. Analysts had been looking for losses of only 5 cents per share.
The company blamed a one-time charge of $15.5 million, or 11 cents per share, for the weaker results. The charge was for employee retention bonuses and other costs related to its deal with WorldCom Inc.
On Sept. 8, H&R Block said it would sell its 80 percent stake in CompuServe for $1.2 billion to WorldCom, which then would sell the service's content and subscribers to America Online.
The transactions are expected to be complete by the end of the first quarter of 1998.
The online service has been steadily losing subscribers and said that at the end of the second quarter it had 5.32 million subscribers, compared with 5.34 million in the previous quarter.
The company expressed optimism about its future, however. It said that its recently announced $24.95 per month flat rate was being well received among both existing and new subscribers.
Another bright spot was its Network Services division, which provides communication paths for a wide variety of electronic transactions for businesses.
The unit's $84 million in revenues represented a 32 percent increase over the same period last year and accounted for 41 percent of the company's total revenues.
Separately, CompuServe (CSRV) majority shareholder H&R Block (HRB) said it had a net loss of $30.4 million, or 29 cents a share, during its fiscal second quarter. Wall Street had predicted the tax and financial services provider would lose 28 cents per share.
During the second quarter, CompuServe received an infusion of $67 million from H&R Block due to tax benefits Block received from the online service's losses the previous year.
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CompuServe
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