Speaking of "Garbage Stocks", TheStreet.com (TSCM) explores alternatives:
TheStreet.com, Exploring a Sale,
Seeks Aid of Wasserstein Perella
By JON G. AUERBACH and STEVEN LIPIN
Staff Reporters of THE WALL STREET JOURNAL
TheStreet.com Inc. confirmed it has hired investment bank Wasserstein
Perella & Co. to explore strategic alternatives, including a possible sale of
the company.
In recent days, TheStreet.com
(www.thestreet.com), which offers
financial-market reports and commentary, has
been shopped to other Internet companies,
according to one person familiar with the
matter. Another person said TheStreet.com,
with a market valuation of nearly $400 million,
had been approached by a would-be acquirer.
It couldn't be determined what premium, if
any, buyers would be willing to pay for the
New York company, which has been
struggling to work out its business model. Web portals and other media
companies are considered potential buyers.
In a statement released Wednesday, TheStreet.com Chief Executive
Thomas J. Clarke said that "this is a very dynamic business environment,
and it is essential that we continue to monitor the strategic landscape." He
said Wasserstein Perella had a mandate "to explore the wide variety of
strategic partnerships and other transactions in order to help grow the
company."
TheStreet.com went public last May at $19 a share amid much fanfare,
with its stock more than tripling on the first day of trading, to $60 a share.
Amid stiff competition from rivals such as MarketWatch.com Inc.,
TheStreet shares have fallen, trading at $16 each Tuesday at 4 p.m. on the
Nasdaq Stock Market. Its shares had climbed 62.5 cents in afternoon
trading Wednesday.
Analysts say part of TheStreet.com's stock weakness is a reaction to the
company's strategy to charge a premium price compared with its
competitors. Currently, the site charges an annual subscription fee of $99
for much of its information, which analysts say has alienated some users
who aren't interested in paying for information they could find elsewhere.
Last month, TheStreet.com announced plans to make information on the
site free and also start a new paid site called RealMoney.com devoted to
commentary. Those plans are scheduled to take effect in the second
quarter.
"Some investors are taking a wait-and-see approach," says Gordon
Hodge, an analyst at Thomas Weisel Partners in San Francisco.
TheStreet.com has also had management difficulties. Last year, Chief
Executive Kevin English resigned after a year on the job and was replaced
by Mr. Clarke, who had been at the company for a matter of weeks.
TheStreet.com, founded in 1996 by hedge-fund manager James J. Cramer
and Martin Peretz, the chairman of the New Republic, has attracted
investments from companies including New York Times Co. and
venture-capital firms Flatiron Partners and Oak Investment Partners. One
of the site's selling features has been its sharp commentary from writers
including Mr. Cramer and Herb Greenberg, formerly a columnist with the
San Francisco Chronicle.
Analysts believe the new two-site model will draw more users to the free
home page, which will enable TheStreet.com to boost advertising. Mr.
Hodge reckons that serious users will pay the $200-a-year fee to access
RealMoney.com. He estimates that TheStreet.com's revenue will reach
$33.4 million this year, up from $14.3 million last year. The company is
expected to post a loss of about $47.5 million, or $1.86 a share,
compared with a loss of $33.6 million, or $1.73 a share, last year.
-- Erin White contributed to this article.
interactive.wsj.com
Cramer and Greenberg get their just desserts, IMHO.
Regards,
Gary |
