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October 14, 1998

USWEB SURPRISES STREET WITH POSITIVE Q3 BEFORE CHARGES

By CBR Staff Writer

Internet service and systems integrator gave Wall Street a pleasant surprise yesterday with third quarter earnings that were just in the black before charges whereas analysts expected a slight loss. The Santa Clara-based company also announced a new set of outsourcing services yesterday (see separate story). The company reported third quarter net losses of $38.5m after acquisition-related charges totaling $39.3m, up from losses of $18.0m last time, which included $10.2m in similar charges, on revenues that rose to $34.0m, from $5.7m last year. Without the charges USWeb returned a two cents per share profit, but the Wall Street consensus was for break even, according to First Call, hence the share price rise. USWeb has bought some 33 companies in the past 21 months, which accounts for its revenue growth and the charges. But the big one, the acquisition of the large CKS Group, which will results in the two companies changing their name to Reinvent Communications Inc, is still to close, and probably will not do until late this year. For the nine months the company net losses were $115.7m, after charges totaling $112.9m, up from losses of $39.3m, including $16.3m in charges. All these charges are a combination of depreciation and amortization, stock compensation, acquired in- process research and development and amortization if intangible assets. Revenues for the three quarters were up to $73.1m from $8.7m in 1997. Cash at September 30 was $23.8m.

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