I was incredibly amazed at the strength today in CNET...I thought the buying at those levels was crazy...The new forecasts for the year is less than $0.25 after analysts had a $0.50 for 2001...For 2002 CNET was supposed to post $0.78 and now that has been lowered to $0.40...The most incredible part is the write downs that CNET had to do were not part of the earnings statement...Revenue is expected to be %20 less that 2001 prediction...
The quarterly results included a $384.2 million non-cash charge, $378 million related to CNet's investment in NBCi...And CNet incurred $183 million in amortization of goodwill related to ZDNet and mySimon purchases...
Quarterly sales topped $120 million, up 30 percent, year-to-year, to $92.1 million BUT The company said it is now targeting first-quarter revenues of between $86 million and $92 million...This is not growth!!!
Compared to CNet's previous forecast about 2001, the new guidance is about 20% lower on the top line and 50% lower on the cash flow line...
Based on the amortization costs and the lower revenue in page views I was shocked that the stock maintained its price...The book value of the company is falling through the floor, and the outlook is terrible...Selling at $15 a share
Looking forward, the company said it does not expect this year's revenues to meet forecasts. Although Cnet is more diversified than many online media companies, it still gets about 62 percent of its revenue from advertising...With page view prices dropping at a scary pace even these estimates look difficult...
There are insiders selling: biz.yahoo.com
Bottom line, after adding in various costs for mergers, amortization and write-downs of business, however, Cnet said it had a pro forma net loss of $424.4 million or $3.16 per share in the fourth quarter, compared with a profit of $224.1 million or $1.65 per share in the year-ago quarter and with little or no real growth and a market cap of $2.049B it feels a little rich to me...
As WR Hambrecht Analyst Derek Brown said, CNET shares now trade at 93 times projected 2001 earnings with little room for price growth...He also said he was "startled" by the magnitude of CNET's downward guidance for 2001...He downgraded CNET from "buy" to "market neutral," less than one month after downgrading the company from a "strong buy" to a "buy." |
