Digex Inc., a corporate Web-hosting company headquartered in Laurel, reported yesterday that its losses narrowed but its revenue decreased in the third quarter.
The news came just one day after the company, whose majority shareholder is WorldCom Inc., said that it was considering a sale.
"This is really the first quarter that we got a true picture of what we've been working on for the past 90 days or so since George [Kerns] took over the reins as CEO," said the company's chief financial officer, Scott Zimmerman.
Digex reported a net loss of $37.2 million, or 58 cents per share, for the quarter ended Sept. 30, compared with a net loss of $51.2 million, or 81 cents per share, posted for last year's third quarter. Revenue in the quarter was $43.2 million, down from $52.3 million in the 2001 quarter.
The company's earnings before interest, taxes, depreciation and amortization were $4.5 million - the first time that number has been positive since Digex went public in 1999.
Andrew M. Schroepfer, president of Tier 1 Research in Minneapolis, said the numbers were "phenomenal" considering the issues that Digex faces because of WorldCom, the telephone giant that has filed for Chapter 11 bankruptcy protection and owns about 80 percent of Digex's shares.
Schroepfer said Digex performed much better this quarter than it did last quarter.
"This quarter looks a lot better because it's a lot cleaner," he said.
Digex said it gained several new customers this quarter, including the American Management Association and the National Kidney Foundation.
It had $16 million in cash and cash equivalents at the end of the quarter and has cut its staff to 818 from 1,404 about a year ago.
The company announced Monday that its board of directors had retained Lane, Berry & Co. International LLC, a Boston investment bank, to explore "strategic options," including a sale. Kerns, Digex's chief executive, said yesterday that it would be premature to discuss what might happen should the company be sold.
Schroepfer said that Digex needs to put itself into the hands of a secure owner. Selling WorldCom's interest in Digex can only aid the Laurel company, he said.
"To get to some kind of stable land, it can do nothing but help their chances of closing new business," he said.
Shares of Digex fell 2 cents to 33 cents yesterday on Nasdaq's small-cap market.