Discount Internet service provider gets Best deal

By John Loesing Acorn Staff Writer

Discount Internet service provider United Online Inc. will start selling its dial-up software at all Best Buy stores under a three-year deal reached last week between the two companies.

United Online, which is based in Westlake Village, said its Juno and NetZero brands would be available in the stores and on the Best Buy Website by fall.

The basic dial-up service sells for $9.95 a month and a higher-speed version costs $14.95 a month.

Terms of the Best Buy agreement weren’t disclosed.

United Online has enjoyed solid growth since NetZero and Juno merged two years ago and experts agree the retail presence should give the company even greater exposure.

United Online posted its first quarterly profit a year ago. For the fiscal year ending June 30, sales reached a record $277.3 million, up 66 per cent vs. $167.5 million for fiscal 2002.

Total pay subscribers increased by a net 142,000 during the final quarter, reaching a record 2.55 million. Total active customers, including users of the company’s free services, were 5.2 million.

Founded as the first free Internet provider, NetZero decided to add a pay service two years ago and reduced the number of free hours available to basic service customers from 40 to 10 a month.

According to a recent survey by Westlake’s J.D. Power and Associates, AT&T Worldnet ranks No. 1 in dial-up customer satisfaction. Juno/NetZero is fourth.

Earthlink ranks highest in overall satisfaction among high-speed providers.

"Price continues to be the No. 1 reason to switch providers among dial-up and high-speed Internet subscribers," said Steve Kirkeby, J.D. Power’s senior director of telecommunication research.

"However, widespread availability is a critical hurdle that DSL providers haven’t yet been able to jump," Kirkeby added.

Shares of United Online (Nasdaq: UNTD) slumped following the Best Buy announcement, dropping from $34 to just over $30 by the end of last week.

Still, the company has enjoyed a meteoric rise. The stock was only $8.50 this time last year.