Don’t expect the news to be good when Autobytel.com releases its second quarter results on July 26. Last week, Autobytel issued a press release stating its second quarter losses will be anywhere from a $1.75 to $1.85 a share – approximately $1.60 more than the third-party company predicted in the spring.
Mark Lorimer, CEO and president of Autobytel, said in the press release, the lower than expected results are due to the “economic environment which has unfavorably impacted dealer expenditures on on-line marketing.”
Part of the incurred losses will come from a $22 million charge the company is taking for its acquisition of CarSmart last year and a $5 million hit from restructuring its European operations.
As of March 31, Autobytel’s deficit reached $99.7 million – up from $95.6 million on December 31, 2000. Mr. Lorimer, who had been predicting profitability for the company in the third quarter, now says Autobytel won’t break even until the fourth quarter of this year after the merger with Autoweb. The merger will take place in the third quarter following a vote by shareholders of both companies scheduled for August 14.
Dealer turnover continues to plague both companies and adds to the financial problems. In the second quarter, Autobytel lost approximately 500 dealers, dropping its total to 4,200 – 1000 of which are CarSmart’s. Autoweb, meanwhile, lost about 440 dealers.
After the merger is completed, Autobytel estimates that the companies will have approximately 6,000 dealers in the network.
The future of the dot-com giant may rest on the results of its joint pilot venture with General Motors. The three-month test concludes on July 31. While both companies have refused to release figures, Pat Morissey, of GM, was recently quoted as saying that the automaker was pleased with the results so far. Surprisingly, though, Chick Ramsay, Autobytel's project manager for the joint test, resigned last week to take a position with the Indian Motorcycle Company.
A successful test may help spark investor interest or may provide an honorable endgame for Autobytel if GM decides to buy it out as many analysts are speculating.