It’s easy to see why CompuServe Corp CEO Bob Massey must have taken one look at the company’s third quarter figures, released last Thursday and decided there and then to clear his desk, which he did on Monday. CompuServe and H&R Block Inc’s chairman Frank Salizzoni, which owns 80% of the company is acting CEO and seeking a replacement. Massey had no job to go to when he left, according to CompuServe. The Columbus, Ohio online and internet service provider appears to be in a tailspin. Sure, it managed to cut back its losses, and even beat Wall Street estimates for its losses by a cent, but subscribers are falling away. The net amount was actually static for the third quarter, compared to the second, which was also static compared to the first. The number remains at 5.34 million. The only areas of growth are in Japan, where CompuServe’s NiftyServe 50-50 joint venture grew its base 7% to 2.18 million subscribers, and in Europe, where the base for its flagship CSi service grew a somewhat limp 54,000 to 873,000. So, the company is managing to attract some subscribers, but it is offset by the numbers leaving or not renewing their contract. The retention rate as of January 31 for customers that have been using the service for 12 months was just 31%. Net losses for the second quarter were $14.2m, down from losses of $101.9m year on year, and from $58m in the previous quarter last time, against profits of $9.4m last time, which included a $7.7m charge for the termination of the Wow! service, on revenues that rose 3.9% to $211.0m. Net losses for the nine months to January 31 were $101.9m, against profits of $50.2m last time, as revenues rose 9.7% to $634.0m. CompuServe is going to concentrate on three areas in its attempt to haul itself back into the black. Its Network Services business will be expanded, the company will try and increase its penetration into the US corporate market and it will continue to cut costs. Marketing costs for the third quarter were about $10m lower than the previous quarter, at $47.3m. General and administrative costs were up a bit on the previous quarter, and stood at $12.4m. There are no layoffs planned right now, and the company has already cut 500 since the start of the current fiscal last May.
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