On a roll for the last two years with its VOD business, New Frontier cited heightened concerns over its competition, as well as an increase in the company’s annual effective tax rate.
But the company is still bullish on VOD, which represents 36 percent of New Frontier’s net income.
"Our distribution on the video-on-demand platform is growing even in the face of increasing competition,” New Frontier CEO Michael Weiner said.
The Boulder, Colo.-based company, which owns The Erotic Networks including Pleasure and seven of its Ten-branded specialty channels, said net earnings for the third quarter rose to $2.9 million or 13 cents a share from $2.7 million or 12 cents a year earlier. Revenues for the quarter were $12 million versus $10.8 million.
New Frontier said operating income for the quarter was $4.4 million, up from $3 million a year earlier. It said net earnings in the third quarter reflect a quarterly tax rate of 35.8 percent, while earnings in the year earlier reflect no tax expense as taxes were offset fully by net operating losses.
The company also noted that its annual tax rate has increased to 32 percent from 30 percent, due to an increase in the projected pretax book income that was used to calculate its effective tax rate earlier in the year, as well as other factors.
As a result, New Frontier lowered its revenue guidance for 2005 to $46.5 million to $48 million from $48 million to $50 million and lowered its net earnings guidance to $10.6 million to $11.6 million from $10.9 million to $12.4 million.
New Frontier traded Thursday at $7.57, down $2.23, on the Nasdaq.
