TheStreet.com: Unique Problems

by StockJockey

Tuesday, April 29, 2008 - 3:53 pm

Originally Published In the News April 29 2008 11:30 AM
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TheStreet.com’s stock (TSCM-NASDAQ) is taking a beating in the wake of their earnings announcement. A punk advertising environment might worry some of the bulls, but a sharp decrease in the number of unique visitors is casting a cloud over the stock. Where have all their readers gone?

The redesign of the flagship site might have scared away some of their readers; it takes some time to get used to a major change. I have visited far less than in prior years, confused by the new layout, in addition to giving up a paid subscription in early 2007 after a nearly ten-year run with RealMoney.com.

Although the company recently settled Jim Cramer’s contract renewal, he appears to be one of the few winners, given his multi-year deal.

And I still have to ask; is MainStreet.com going to be successful? Color me dubious for now, and management is on the defensive trying to defend their strategic plan as they slowly deploy the war chest they raised from a large institutional investor in 2007. The company faces many challenges, including the need to increase its share of non-financial advertisers, a job that is easier said than done.

For now, Mr. Market is giving the thumbs down.

Broadening financial info site TheStreet.com (NSDQ: TSCM) announced Q1 revenue of $18.9 million, a 31 percent year-over-year increase from $14.5 million. However, because of higher costs across the board, net income slipped 19 percent to $2.4 million ($.07 per share) from $3 million ($.11 per share). Overall, advertising revenue grew 18 percent to $6 million, while marketing services revenue—derived from Promotions.com—accounted for $2.2 million in revenue. Excluding this acquisition, revenue would have grown 15 percent. The numbers are disappointing the market, which was looking for revenue close to $20 million and EPS of $.10 per share. As such, the stock is cratering pre-market, currently down about 13 percent. PaidContent.org

Shareholders might be comforted by nearly $2.50 per share in cash on the company’s balance sheet. Technology Crossover Ventures invested $55 million in the company late last year, in the form of warrants and preferred stock. Hopefully for TSCM management TCV has some patience.

The stock is holding the lows made earlier this year, but management needs to get it in gear, a job that could prove difficult given the skepticism from the analysts on the conference call. And you gotta wonder, where has all their traffic gone? Blogs?

This is shocking.....the web analytics might not be completely spot on, but it appears newspapers are not the only media outfits with problems.

Seeking Alpha and WSJ up, TheStreet.com down

Earnings: TheStreet.com Q1 Revs Up 31 Percent; Stock Falls On Lightness
Paidcontent.org
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position

Comments:

Nice article, that is very interesting. I dare say that traders are finding new homes, once they realize there is good quality information out there, but it takes a little digging. Not too many of us have the capital to spend on advertising that TSCM does.

Posted by Quint Tatro on 04/29/2008 at 04:12 PM

I think they need to bring in more seasoned writers. The kids try, but many have no experience. I miss Gary B....bring back the chartman!

Posted by on 04/29/2008 at 04:27 PM

I have nothing but love for RevShark.. after reading him religiously for several years in late 90’s / early 2000’s I eventually self-taught myself how to trade profitably on a consistent basis. Thanks immensely for the education, Rev.

I’m also no longer a subscriber.. see no need at this point. Every now/then I will visit the main RealMoney page just to gauge sentiment..

Posted by Buck Woodford on 04/29/2008 at 04:50 PM

Buck,

Agreed, RevShark has an innate feel for the intraday action. Simply amazing.

He would call Cramer on the carpet as well; their arguments used to crack me up.

TSC will find their way again, but might need to spend some money to do so. Minyanville is a more compelling read, although I do not hit it every day either.

Too much money goes to officers and directors; its time for them to pay the rank and file as well.

Penny wise, pound foolish.

I have always loved the site, I am not writing it off yet.

Posted by on 04/29/2008 at 06:46 PM