TheStreet.com Joins the 52-week Low Club

by StockJockey

Monday, March 03, 2008 - 7:49 pm

Jim Cramer has seen his share of year-end markups and linoleum floors over the years. The traders that pushed the shares of TheStreet.com to a 52-week high at the end of December might sympathize, and probably are sporting a hangover of their own.

Indeed, the stock is a House of Pain, to turn a phrase. Jim might not have to sell the Quogue house just yet, but his ongoing contract negotiations are taking a toll on the market cap, and his net worth. The recent conference call following earnings did not shed much light on the issue:

Transcript
Q: Your comment that you expect margin expansion during the year; what sort of assumptions does that make about the Jim Cramer contract?

Thomas J. Clarke, Jr.: Bill, it makes no assumptions about that. Whatever that negotiation turns out to be we stand by the fact that we expect to expand the margins.

Q: You sound reluctant to talk about it, but is there anything you can say -- that’s kind of surprising to us? Is there any color you can shed as to why this time around seems to be taking a little longer to come to an agreement?

Thomas J. Clarke, Jr.: No, I can’t shed any color on it. I think Jim and the company would both prefer not to negotiate in the media so I think I can’t really give any color on it, to be honest with you.

Q: Would a prudent man still be able to say that he owns a lot of the company? It’s in his best interest to re-up? Is that a reasonable assumption?

Thomas J. Clarke, Jr.: I think anybody looking at it from the outside would make that reasonable assumption.

The woes might not be all Cramer related; the company might be struggling with growing pains as well. The recent outlay of nearly $3 million to redesign the flagship site and launch Mainstreet.com were certainly time consuming, and likely distracted attention from day to day operations.

Although Cramer gave his blessings to Aaron Task moving over to Yahoo!’s Tech Ticker, the rank and file their certainly are not getting any mad money stuffed in their paychecks, and a few have walked out the door, as noted by Jossip nearly two months ago:

“Apparently [CNBC anchor Jim Cramer’s] TheStreet.com isn’t doing so well. In the past two months various editors and reporters have been jumping ship, and they have yet to give out any end-of-year bonuses. Some senior editorial staff didn’t receive any annual raise, while other lower-paid employees received just below the standard of living percentage increase.” Sour wine grapes!

Jossip is not very impressed with Mainstreet.com, either:

MainStreet.com, the just-launched DOA celebrity-focused financial site from TheStreet.com, continues to offer up evidence of its irrelevancy.

On a story about American Idol narrowing down hopefuls to the top 24 contesants, MainStreet.com sees a newspeg – that a third of them are teens – and launches into this brilliant piece of advice:

“Renters insurance is especially important for young people just starting because, aside from vehicle insurance, this is their first exposure to taking responsibility,” says Jeff Calderon, an insurance salesman for Allstate. Jossip

Although Alexa data is extremely flaky, it appears the site’s traffic peaked on its launch date:

Analysts have girded themselves for a steady erosion in paying subscribers at the flagship publications, but page view growth is not very impressive of late; Minyanville is likely skimming away some of their best demographics and a few long-time writers seem more interested in their own blogs than Realmoney.com.

Too, competition from the blogosphere might cap their upside. But there is really only one thing that can turn the stock around.

And until Jim Cramer renews a long-term contract, the stock will likely remain under pressure. Although this is one problem that he can clear up with the stroke of a pen. Has the current enterprise value, now under $200 million, priced in a Cramer-less website?

Probably not. And whoever is at loggerheads with Cramer has already been taught an expensive lesson.

Don’t mess with Jim.

He seems to be firmly in the drivers seat, given the stock’s reaction. And soon we might find out how much his autograph is worth.

Stay tuned.