H & R Block Inc got rid of Columbus, Ohio-based CompuServe Corp just in time, but the shareholders that bought into the company at its flotation don’t feel so chirpy about it. The company made a surprisingly large $29.6m fiscal first-quarter loss, blaming a decline in the number of subscribers to its on-line service and the cost of creating its new WOW! family-oriented service and making other improvements. It warns that it will also make a loss this quarter, but hopes earnings will improve in the second half of the fiscal year. The company is taking stern action, cutting 150 jobs, or 4% of its work force, as part of a cost-cutting programme intended to save $30m on an annualized basis. It will also sell the corporate software group of its Spry Inc unit. The number of people logging off exceeded the 900,000 new subscribers to the company’s on-line services, producing a modest decline in subscriber numbers. As of July 31, CompuServe had 3.3m subscribers worldwide, which rises to 5.2m with those of the NiftyServe, a joint-venture Japanese on-line service. The company expects increased revenue from advertising and fees for electronic commerce. The shares dropped 12.5 cents to $13.50 ahead of the news – a nasty tumble from the $30 at which it floated in April.
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