The company, struggling financially for several months, reported a fiscal second quarter loss of $58 million, including an after-tax charge of $4.9 million to shut down WOW! and a $24.5 million after-tax charge as a result of accelerated amortization of previously capitalized subscriber acquisition costs.
CompuServe said membership in its flagship CSi service was flat at 3.3 million as of Oct. 31. Membership in WOW! had reached only 102,000.
The company launched WOW! with great fanfare in March, calling the service a simple way for new computer users to go online. CompuServe set up WOW! staffers in a suburban Columbus, Ohio, office building outside of CompuServe headquarter in an effort to distinguish the service from the flagship CompuServe, perceived as stodgy and dated.
But WOW! never performed up to expectations, despite a significant ad campaign from Resource Marketing, Columbus, and Martin Direct, Richmond, Va. A planned launch of a version of the service for teens never happened. And staffers this summer moved back to CompuServe headquarters as the company's money troubles increased.
Now, CompuServe is back to its roots as a business-oriented online service company. Its Network Services Division, providing intranet and Internet connectivity to businesses, has 1,061 corporate customers. Revenues there grew 33% in the second quarter to $63.6 million and accounted for 30% of CompuServe's overall revenues. CompuServe for Business will launch in the U.S. and Europe based on the current CSi 3.0 platform. CompuServe will add new business-oriented services to its existing CSi service starting next month.
Copyright November 1996, Crain Communications Inc.