Could be a nice buy op or average down which is where I am at...niv
CNET shares fall as company's Q3 revenues from securities rise
By Georg Szalai, BridgeNews
New York--Nov. 16--Shares of CNET Networks Inc., a provider of
technology-related content on the Internet, fell more than 20% Thursday
after
the company reported higher third-quarter revenues from securities in its
most
recent 10-Q filing with the Securities and Exchange Commission.
* * *
Most recently, the company's stock was trading at 20 13/16, down 5 3/8
or
20.53%. That was close to the shares' 52-week low of 16, established in
mid-October.
In its latest 10-Q filing, CNET said that the third-quarter revenues it
booked not based on actually received cash but in exchange for securities
of
customers reached $5.8 million, or approximately 5% of overall revenues. In
the
same period last year, revenues-for-securities made up approximately $1.8
million, or 2.5% of overall revenues. CNET reported its third-quarter
results
on Oct. 24, but did not provide any information on revenues booked in
exchange
for securities.
"Investors are concerned that these (revenue-for-securities) deals are
not
worth what the company booked for," Credit Suisse First Boston analyst Bob
Hiler explained. He compared CNET's situation with that of Amazon.com Inc.,
which has recently been met with criticism as it has also done
revenue-for-securities deals with such online companies as the failed
Pets.com
and Drugstore.com.
While the news from CNET's 10-Q filing was not positive for the stock,
Credit Suisse's Hiler said he continues to be bullish on the company and
still
rates its shares a strong buy. After all, most of the company's
revenue-for-securities deals will expire in the fourth quarter, he
explained.
Before the market open on Thursday, Pacific Crest analyst Steve
Weinstein
also commented on CNET's revenue-for-securities situation. Excluding the
company's planned acquisition of ZDNet, revenue-for-securities deals made
up
10.3% of third-quarter revenues, he said. "While we generally prefer to see
non-cash revenue as a single digit percentage of total revenue, we don't
anticipate this being an issue going forward," the analyst contended in a
research note. His explanation was similar to Hiler's: Most revenue in the
form
of securities is a result of deals ending in the fourth quarter. Also, CNET
has
not entered additional such deals in the third quarter. Finally, ZDNet has
virtually no such deals.
As a result, CNET should not suffer from past revenue-for-securities
deals
for too long, according to Weinstein. His conclusion in Thursday's research
note was different from investors' conclusion. CNET shares are still
"inexpensive for a leading new economy brand," the analyst wrote in
reiterating
his strong buy rating. End |
