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Microsoft's "Unique" Stats & Pre-Game Earnings
By Rick Aristotle Munarriz
As one of the few profitable online ventures, content aggregator Go2Net (Nasdaq: GNET - news) seems to take its moniker seriously. The stock opened higher this morning before losing ground later in the day after reporting stronger than expected earnings for the June quarter. It marked the sixth consecutive period of higher operating profits.
Revenues soared to $23.0 million from $5.7 million the year before. Meanwhile, pro-forma net income more than tripled to $10.8 million -- or $0.22 a share (excluding acquisition and stock compensation charges).
The company behind the popular HyperMart free hosting site and one of the better financial forums out there in Silicon Investor, has come a long way. Just three years ago, Go2Net consisted solely of metasearch specialist Metacrawler, online game haven PlaySite and lesser "go2" prefix sites.
Yet, even then the company was attracting quality advertisers like Microsoft (Nasdaq: MSFT - news), The Wall Street Journal and a young Amazon.com (Nasdaq: AMZN - news). Go2Net had less than two dozen sponsors then -- it's just shy of 600 today.
But while banner ad space demand for Go2Net's popular niche content grows, so does its reliance on new revenue streams. The company has evolved into a well-rounded Internet company in the realm of consumer services, business services, and enabling technologies. June marked the first quarter in which ad sales made up less than half of total revenues.
The trend should continue, despite the tantalizing billboard space prospects of Go2Net's traffic, which generated 37.5 million page views on a typical day last month. For instance, consider the transaction fee growth of its Authorize.net online payment processing platform with the HyperMart small business community topping a million members.
With the $0.22 a share showing blowing away the $0.15 consensus estimates (and well above even the highest $0.17 projections), what will Go2Net do for an encore? Brace for broadband.
In a StockTalk segment earlier this year, CEO Russ Horowitz observed that "a lot of companies that have been narrowband winners face similar risks to what offline companies did when the Internet emerged."
So as the company loads up on media-rich content possibilities like a recent $20 million joint investment in Sandbox and teaming up with Paul Allen's Vulcan Ventures in broadband pursuits, the company is also free to scoop up any puzzle pieces that have recently been marked down in the new economy selloff.
At a time when cash-strapped companies are hungering for capital, Go2Net closed out the quarter with $227 million in cash and short-term investments. While that has helped prop up net profits and margins (the company reported $4.3 million in interest income for the quarter) the company is doing just fine without it. Gross margins climbed to 82% while operating margins were a robust 29% of pro-forma sales.
Go2Net is taking aim -- and hitting nothing but Net. |
