At a time when business-to-business Internet companies are in favor and business-to-consumer companies are not, LendingTree Inc. is arguing that despite appearances it belongs in the former category.

"We are very much a B-to-B-type company," said Douglas R. Lebda, chief executive of the Charlotte, N.C., company. "We are focused on businesses because businesses pay us."

LendingTree Inc. said this week that it lost $17.2 million, or 96 cents a share, in the first quarter. That was better than the average of $1.04 estimated by analysts First Call/Thomson Financial surveyed.

The company had expected to become profitable in around the second half of 2002 but expects to get there sooner in light of the first-quarter performance, though Mr. Lebda said he is not sure if it will be months or quarters sooner.

"We are beating the expectations because of our business model and our underlying structure," he said. "We are a marketplace, not a lender."

If consumers qualify for loans they apply for at LendingTree's Web site, the company sends the form to as many as four lenders, which pay $5 to $8 per form. If the loan closes, the lender pays LendingTree $50 to $400, depending on loan type. The consumer pays LendingTree nothing.

That's a good deal for the applicant, but like many consumer-oriented Web companies, LendingTree has had to spend heavily to promote its site. It spent $10 million on advertising last year and has budgeted $50 million for 2000.

Those costs well exceed revenues. In the first quarter LendingTree spent $111 on marketing for every loan request transmitted to a lender, and made $33 in revenue from each - a per-unit loss of $79.

But it could have been worse. Christopher Penny, an analyst at Friedman Billings Ramsey, had expected that figure to be 54% higher.

"Their marketing campaign was much more effective than anticipated," Mr. Penny said.

LendingTree's stock price has been volatile. It skyrocketed above $20 in the first few weeks after the company's initial public offering in February. But its value later plunged; by mid-April it was trading below $4. LendingTree was trading at $6.3125 midday Thursday, up 1% from Wednesday's close.

Mr. Lebda said the stock has been hit so hard because LendingTree's business model is misunderstood. "Investors see us in the category of lenders, comparing us to E-Loan and," he said, "and we are very different from them."

First-quarter revenues rose 600%, to $4.5 million. Transmitted loan requests were up 97%, to 147,000, and dollar volume of closed loans rose 28%, to $563 million. Revenues from the licensing of LendingTree's Lend-X application-processing technology to other lenders were $788,000. Some of that was from consumers funneled to LendingTree through Lend-X.

Mr. Lebda said his company has $63 million in cash, an ample amount for the rest of 2000. He said he is not worried about securing additional funding next year.

"People will look at our cash on hand, margins, reasonable marketing costs, and profitability," he said. "Over time, our stock price will reflect that we have value."

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