Intelidata Technologies Corp.’s third-quarter results, though dispiriting, reflect a company in transition as it seeks to become a profitable supplier of Internet banking and e-bill payment technology, officials said.

The Reston, Va., company’s revenues shrank 92% from a year earlier, to $1.5 million, and its net loss grew 66%, to $2.8 million, tempered only through a large gain on securities sales. Most glaring was an operating loss that jumped more than tenfold, to $7.1 million because of massive investments in technology.

During a conference call with investors Wednesday, Steven Mullins, Intelidata’s chief financial officer, said that nearly half the increase in operating expenses went to research and development of electronic billing products and services. The company is continuing a two-year retreat from the telecommunications business, he said.

Intelidata recently completed work on a new front-end Web banking software product to replace the one it lost in January when it sold its 26% stake in Home Financial Network to Sybase Inc. of Emeryville, Calif., he said.

Joseph Biernat, director of institutional research at Kimball & Cross of Boston, said he “wasn’t expecting much financially for the third quarter because Intelidata is in a transition phase right now.”

At this point the company’s financial results are not “the driver of stock” valuation because Intelidata is investing in “things that will enable them to generate future revenue,” he said.

Intelidata’s stock closed Friday at $4.91, down 5.9% from $5.22 a share the week before.

Another damaging blow to the bottom line came at the end of the second quarter, when US West, a Denver-based regional telephone company, canceled a contract under which Intelidata had supplied caller-identification boxes to US West customers.

Mr. Mullins said that 40% of Intelidata’s 1999 revenues came from US West.

Lee Howser, an analyst at Raymond James & Associates of St. Petersburg, Fla., said that Intelidata’s revenues are down because of the US West cancellation but the company “is clearly dedicating its resources toward building its Internet banking business.”

Intelidata officers said the company’s revenue model is moving from one-time software licensing to recurring revenues. In the second quarter, 10% of its revenues came from recurring sources, Mr. Mullins said, and one-third came from this type of source in the third quarter. This share is still growing, he said.

By the first quarter, Intelidata plans to have at least six customers providing recurring revenues, compared with none a year before.

“We are looking to eliminate the choppiness of our revenues,” Mr. Mullins said.

Intelidata, in conjunction with Alltel Information Services, has a contract to build a payment and presentment service for Spectrum, a joint venture of Chase Manhattan Corp., First Union Corp., and Wells Fargo & Co. Intelidata says it hopes to become the primary supplier of conductivity software that banks would use to gain access to Spectrum’s offerings.

Kimball & Cross’ Mr. Biernat said that Spectrum “is potentially a very large revenue source”


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