Freeserve produced the strongest set of figures in its short history yesterday to claw back some of the ground its shares lost in the new year sell-off of internet stocks.
John Pluthero, chief executive of the UK's largest internet service provider, said quarterly figures showing a reduced pre-tax loss of £3.6m on a turnover of £3.8m, and 1.575m registered users were "very strong".
The figures, for the 12 weeks to November 13, 1999, compare with a pre-tax loss of £5m and a turnover of £3.4m in the previous 16-week quarter.
Mr Pluthero pointed to the 14,000 new customers joining the service each week and the increased amount of time they are using the service as evidence that Freeserve has been holding firm against rival offerings from big American providers.
Shares in Freeserve edged up 2p to 491p in a market still nervous about the prospects of internet companies. Last month Freeserve shares were trading at 590p.
"This has been a good quarter for us," Mr Pluthero said. "Independent figures show we now have the most recognised internet brand in the country and we reach 85% of the internet population.
"Our e-commerce is improving and we are positioning ourselves to be at the front of the wave when internet access goes mobile later this year."
Analysts broadly welcomed the results, describing them as "solid" and saying losses were less than had been expected. However, some remained cautious.
"Freeserve has certainly not been as volatile as such fireworks as QXL [the online auction house] but the current results do nothing to alter its exposure to current anxieties over tech stocks," said Miles Saltiel, head of technology research at West LB Panmure.
Mr Pluthero said he was unconcerned by analysts' forecasts that Freeserve, which is valued at more than British Airways, will not make a profit until the third year of its operation.
"We are in an investment stage which is about growing our brand and our user base," he said.
"Our losses are in line with analyst expectations of around £10m-£15m a year over three years. I think most people would spend £30m-£40m to build the biggest internet company in the UK."
The figures showed that advertising now provides £4.50 for every 1,000 page impressions, more than double Freeserve's target.
The company has also doubled the number of e-commerce partners it had last quarter to 80 and expects to add another 30 over the next few months.
Increased advertising and e-commerce revenues, plus a share of telephone call charges, helped the company offset an expensive pre-Christmas advertising and marketing campaign.
Freeserve remains on the lookout to buy smaller internet service providers.
"We're talking to various people about what to do with their subscriber bases," Mr Pluthero said. Deals are likely to be structured either as alliances or paper acquisitions.
Freeserve was floated in July at 150p per share and is still 80% owned by the electrical retailer Dixons. It recently signed a deal with BT Cellnet to provide mobile internet services to the next generation of wireless application protocol (WAP) mobile phones, due out in the spring.
However, Mr Pluthero said yesterday: "It will be a slow-burn story this year with only 10% of the UK population owning next generation phones by the end of the year - 2001 is going to be the year of WAP."
