Q4 Revenue Drops for Modem Media

NEW YORK Modem Media reported Tuesday that fourth-quarter revenue slipped 16 percent from the third quarter and 23 percent from the year-ago period. The interactive agency, 43 percent owned by the Interpublic Group, also swung to a net loss for the quarter.

Revenue from continuing operations for the fourth quarter of 2002 totaled $15 million versus $17.8 million for Q3 2002 and $19.6 million for Q4 2001, which included pass-through revenue of $1.5 million, $1.3 million and $800,000, respectively.

Modem Media posted a loss for the fourth quarter from continuing operations of $5.4 million or 21 cents per share, compared with income of $2.1 million or eight cents per share for the third quarter and $1.1 million or four cents per share for the fourth quarter of 2001.

The company took an after-tax net charge of $5.5 million in the fourth quarter as a result of a restructuring. Modem Media shut down its Toronto, Munich and Hong Kong outposts in the third quarter. Its remaining offices are Sao Paulo, London and San Francisco, and its Norwalk, Conn., headquarters.

Net loss, including discontinued operations, was $5.2 million or 20 cents per share for the fourth quarter, versus an income of $1.7 million or seven cents per share for the third quarter and $200,000 or one cent per share for the fourth quarter of 2001.

The company also reported that it repurchased 12,690 shares of its common stock at an average price of $2.49 per share during the fourth quarter.

For full-year 2002, revenue was down 28 percent to $70.1 million from $97.1 million in 2001. Full-years 2002 and 2001 included pass-through revenue of $4.2 million and $3 million, respectively.

Modem Media reported a loss of $4.9 million or 19 cents per share, compared with a loss of $3.7 million or 14 cents per share for 2001. The after-tax impacts of the restructuring and other net charges were $11 million and $8.9 million, respectively.

Net loss, including discontinued operations, was $7.5 million or 29 cents per share for full-year 2002, versus a net loss of $6.9 million or 27 cents per share for 2001.

The interactive agency projected revenue for the first two quarters of 2003 to be flat, with slightly positive earnings per share. “Due to the current unsettled economic situation, we are not in a position to provide guidance for the second half of 2003 at this time,” said Frank Connolly, Modem Media chief financial officer.

Modem Media stock [MMPT] was trading on the Nasdaq Wednesday at $2.25, down 10 cents or 4.26 percent. Its 52-week high is $5 and 52-week low is $1.68.