Rediff.com, a Nasdaq-listed India-focused Internet portal, on Wednesday reported its revenue surged in the October-December quarter, showing it's unaffected so far by a forecast slowdown in Internet advertising.

The results caused the price of the company's American Depositary Receipts (ADRs) to jump. The ADRs closed on Wednesday at 3 7/8, up from 3 3/8 at the previous day's close.

Revenue rose to $1.75 million from $1.34 million in the previous quarter and jumped four-fold from $370,000 in the year-ago period.

Yet like most other dotcom companies, Rediff.com continues to lose money. It posted a loss of $820,000, widening from a loss of $110,000 in the previous quarter due to foreign exchange fluctuations, according to the company.

The loss, however, narrowed sharply from $2.59 million a year earlier.

Its operating loss in the October-December quarter narrowed to $1.58 million from $2.09 million in the previous quarter, due primarily to the 31 percent rise in revenue.

"Strong revenue growth, healthy gross margins and a further reduction in loss per share validate our commitment to reach profitability in a measured time frame," Rediff.com's chairman Ajit Balakrishnan said in a statement.

He told analysts after the results were released that Rediff.com may turn a profit by the fourth quarter of 2001.

Rediff.com’s number of page views soared to 670 million during the past quarter, up 520 percent from a year earlier and by 69 percent over the previous quarter. That figure is closely watched as it strongly influences the advertising rates a portal can charge.

Advertising revenue contributed 90.6 percent of total net revenue for the quarter, the company said.

Global portal giant Yahoo! Inc (NasdaqNM: YHOO - news) stunned the advertising-supported dot-com sector last week by announcing its revenue and profit for 2001 would fall below even the most cautious estimates.

Balakrishnan said advertising revenue in India was unlikely to be affected, though the contribution of revenue from dotcom clients was decreasing and being offset by revenue from old economy firms.

"In a developing market like India, the Internet as an advertising medium is at a growing stage and we are seeing a lot of excitement about this from old economy companies," he said.

India has nearly two million Internet subscribers and the number is expected to increase to about 15 million by December 2003.

The growing popularity of the Internet is boosting sales of personal computers (PCs) as well. More than one million PCs were sold in India in 1999, and computer research company International Data Corp has forecast sales of 1.8 million in the year to March 2001.

Rediff the leader

Rediff.com began operating just over four years ago, giving it the first-mover advantage in the Indian portal market. It still leads most other Indian portals in page views.

The site has comprehensive content aimed at Indians and offers e-mail, online shopping and a search facility.

However, analysts say Rediff.com confronts a growing number of powerful competitors including Indiatimes.com, 123india.com and Yahoo! India.

Rediff.com last June raised about $55 million through an initial public offering in the United States. Its American Depositary Receipts (ADRs) were issued at $12, rose as high as $28, and then tumbled to just a little more than $2 amid the global selloff of dotcom stocks the past year.

Rediff.com’s investors include Warburg Pincus, Draper-India International, General Electric's (NYSE:GE - news) affiliate GE Capital Services and the Indian arm of Hong Kong media baron Richard Lee's Pacific Century Cyberworks.

Intel Capital recently sold its stake in Rediff.com to Warburg Pincus for $3.55 million, or $5.50 per share.