United Online CEO Eyes Internet Services [1st August 2003]

NEW YORK (Reuters) - United Online Inc. (UNTD) Chief Executive Mark Goldston said on Thursday the company plans to expand beyond Internet access into other services, possibly similar to recent offerings from Yahoo Inc. (YHOO) , such as e-mail storage.

Discount Internet service provider United Online was looking at various acquisition possibilities as a way to deploy its $193 million in cash, Goldston told Reuters after the company reported a quarterly net profit and 46 percent revenue growth.

"We would either buy things that provide Internet service provider subscription revenue or you might see us look at things that provide Internet services revenue. All the things Yahoo is getting into with subscription revenues are all things that make sense for an ISP," Goldston said in an interview.

In addition to e-mail storage, Yahoo has offered several other paid services to diversify its revenue base including Web hosting for small businesses.

Goldston also said Westlake, California-based United Online is contemplating a dividend. He also did not rule out buying more subscribers, as long as they provided cash flow to the company right away.

But he said the company was unlikely to get into offering programming like some of its rivals, focusing more on services it can charge for that complement Internet access.

He pointed to the company's early success with its higher-margin new Web accelerating software, which speeds up dial-up connections by about five times, as an example of services it would seek out.

The company charges $15 for the service that includes the software, still about $7 lower than rivals EarthLink Inc. (ELNK) and AOL Time Warner Inc.'s (AOL) America Online, which are planning to include the software for free.

The more companies who include the accelerating software, "the more awareness that will be built, which I think will stem some of the migration to broadband because so many of the people who go to broadband only want increased Web surfing speed. They don't care about downloading power," he added.

United Online is hoping to get users who do not want to pay for the more costly high-speed access via cable or digital subscriber lines but want connections faster than traditional dial-up.

© Reuters 2003. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.