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MicroStrategy's 3Q Loss Beats Expectations

Executives say the company's core operations are on track to return to profitability in the current quarter.
MicroStrategy Inc. Tuesday reported a net loss of $6 million on sales of $44.2 million for its third quarter ended Sept. 30. The results exceeded analyst expectations, and MicroStrategy executives say the company's core operations are on track to return to profitability in the current quarter.

MicroStrategy has reported losses since March 2000 when it restated revenue and earnings going back to 1998. Since then, it has steadily narrowed its losses by laying off workers and shedding unprofitable businesses to focus on its core business-intelligence software. Last year, the company reported a net loss of $168.2 million--including huge restructuring charges--on sales of $64.9 million in its third quarter.

In a conference call, CEO Michael Saylor said that license, consulting, service, and maintenance revenue from the company's installed base alone could total $160 million a year. "We can use that revenue base as we go into 2002 as a bridgehead," he said. He predicted the company's core business would be profitable in the current quarter and all through 2002. The company is still winding down its money-losing Strategy.com subsidiary.

For the third quarter, MicroStrategy reported product license revenue of $16.6 million, down from $28.1 million a year ago. Revenue from product support and other services was $27.6 million, down from $36.7 million in the same period last year. MicroStrategy's pro forma net operating loss, after stock gains and paid dividends, was $5.7 million or 6 cents per share, compared with a pro forma net operating loss of $29.9 million or 37 cents per share last year.