- The Washington Times - Monday, February 5, 2001

The stock of LifeMinders Inc., once promising, has taken a tumble as of late, but company executives insist they are in a period of refocusing, and not rebuilding.

The company said last Tuesday it had to cut about 19 percent of its work force Jan. 5 to reduce costs. Additionally, chief executive officer and co-founder Stephen Chapin left the company, and was replaced by director and venture investor Jonathan Bulkeley, a former America Online executive.

"The board and he agreed that his skill set was good for getting things started, but not for managing the existing business," Jonathan Bulkeley, current chairman and chief executive officer says. "He left through a mutual agreement saying it was time to go, and the company needed someone else to take it to the next step."

"We'll figure out where the growth is and go from there," he says. "But we're not going anywhere unless it's our choice," Mr. Bulkeley says.

LifeMinders, a Herndon-based direct marketing company, uses e-mail to send free and personalized mailings from various categories of information to its members. LifeMinders membership stands at about 21 million, rising from 7.5 million at the start of 2000. The company was founded in 1996, and went public in 1999.

JP Morgan H&Q; lowered its rating of LifeMinders from long-term buy to market performer status, meaning the stock is not quite as good a buy as it once was.

"LifeMinders stock had declined in recent months to a level where the company had, in our estimation, been priced for a train wreck," says JP Morgan H&Q; analyst Paul Noglows. "Sure enough, the fourth quarter was a major disappointment, at least on the income statement."

Shares of LifeMinders closed at $2.84 on the New York Stock Exchange Friday. It hit a 52-week high of $94.81 on March 14. Though shares have fallen 92 percent in the last year, net losses for the fourth quarter fell to $70.5 million ($2.77 per diluted share) from $17.2 million ($1.60 diluted) for the year before.

Diluted shares reflect the value of options, warrants and other securities convertible into common stock. Net sales also dipped by 13.5 percent to $387.1 million from $447.6 million.

The company's revenue fell 30.6 percent to $11.6 million for the fourth quarter, and 32 percent lower than Merrill Lynch's expected revenue of $17 million. Yearly revenue jumped 285 percent to $53.9 million, up from $14 million for the year before.

Mr. Bulkeley chalked up the disappointing revenues to a heavy use of dot-coms, which make up 60 to 70 percent of LifeMinders' customer base.

"This suggests that revenues from traditional marketers fell 37 percent sequentially to $3.6 million from $5.7 million in the third quarter of 2000," Mr. Noglows writes in his report. "LifeMinders continued dependence on dot-coms is a major cause for concern."

"LifeMinders had a disappointing fourth quarter, badly missing both revenue and earnings per share targets. Given the shortfall, we are surprised that there was no pre-announcement," Henry Blodget, analyst with Merrill Lynch in New York says.

Mr. Bulkeley says one facet of LifeMinders is phasing out its wireless messaging system after disappointing fourth quarter reports.

"It will take a long while and a long effort for it to become profitable. We want to control our destiny." Mr. Blodget said the company's wireless division was losing about $1.5 million per quarter.

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