United Online Reports Strong Profts, Acquires Classmates Online

United Online Inc. on Monday reported a 42 percent jump in profits and a 25 percent increase in revenues in the third quarter, but lowered its forecast for the number of paid subscribers it expects by the end of the year.

In addition, the operator of Internet service providers Juno and NetZero said it had agreed to acquire Classmates Online Inc. for $100 million in cash.

The Westlake Village, Calif., company said net income for the quarter ended Sept. 30 was $12.6 million, or 19 cents a share, compared with $8.9 million, or 13 cents a share, in the same period a year ago. Revenues rose to $110.7 million from $88.8 million a year ago.

"Our September quarter financial results were driven by continued telecom cost declines and further expansion of the company's billable services margin," Charles S. Hilliard, executive vice president and chief financial officer for United Online, said in a statement.

Hilliard, however, said the company Internet access business "continued to be impacted by competition and other factors."The company lowered its forecasts for the total of pay subscribers by Dec. 31. United Online expects to increase the number to between 3.25 million and 3.35 million, which is less than the previous forecast of between 3.3 million and 3.5 million.

Revenues in the December quarter are expected to be between $109 million and $112 million.

In addition, the company on Monday said it had agreed to acquire Classmates Online, based in Renton, Wash. Classmates Online has 175 employees and operates community sites in the U.S., Sweden and Germany.

Classmates' board and shareholders have approved the deal, which is expected to close this year.