Finet.com Inc., a Web-based mortgage lender that has been shutting some units and taking other cost-cutting measures, had a slight revenue increase in its fiscal first quarter after reporting revenue declines the previous two quarters.

The Walnut Creek, Calif., company had revenues of $2.04 million in the three months that ended July 31, versus $2.03 million in the last quarter of its 1999 fiscal year.

Nonetheless it had an operating loss of $6.3 million, a bit more than half the $12.2 million loss in the previous quarter.

Industry veteran Mark Korell, who joined the 10-year-old Finet as chairman and chief executive officer about 10 months ago, attributed the latest loss in part to an $18 million marketing and branding campaign and a $5 million upgrading of technology.

Finet.com, which bought most of the assets of Lowestrate.com last week, said it reduced costs 41% by discontinuing unprofitable lines of business.

Mr. Korell, who vowed to make Finet.com "a little leaner and more focused" when he joined in October, said on Friday: "The company was in need of cutting costs and raising capital. We are investing in people, marketing, and technology. We're building a new company here, and that takes money."

The rebuilding has included closing nine branch offices in the past six months, reducing staff, and getting out of the servicing business.

The discontinued businesses and other factors contributed to Finet's having about $15 million of writedowns the previous two quarters.

Finet bought most of the assets of the 30-employee Lowestrate.com for 1.4 million of its shares.

It said that Lowestrate.com of Blue Bell, Pa., closed about 1,400 mortgages, valued at more than $182 million, in 1998. Finet estimated that the acquisition would add $2.5 million of revenue a year and extend its reach to 48 states.

"We're just buying more capacity to grow fast," Mr. Korell said of the purchase.

Both companies support a multilender network and offer loans according to the best rates and terms available. Lowestrate.com, like Finet, releases all of its servicing.

"We don't feel we can be an effective and economical servicer without being much, much bigger," Mr. Korell said.

"Servicing was made for the big guys. We're going to be fast and transaction-oriented and not have a large balance sheet."

Finet said that it sells the bulk of its servicing to General Motors Acceptance Corp.

It sold the $300 million servicing portfolio of its business-to-business channel, Monument.com, to the Wallick & Vok banking company of Cheyenne, Wyo., on June 30.

Finet also has entered into a one-year, committed, $75 million warehouse line of credit with GMAC-Residential Funding Corp. to "support planned growth in closed-loan volume."

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