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Technology Stocks : ZD Inc., Ziff-Davis (ZD) -- Ignore unavailable to you. Want to Upgrade?

To: fiberman who wrote (836)	7/30/1999 1:31:00 PM
From: Gabor	Read Replies (1) \| Respond to of 855

Yes,too little too late.It has a long way to go.With the fomc meeting coming up I don't see much for the near future. Maybe by Oct-Nov it will improve. Regards Gabor

To: fiberman who wrote (836)	10/29/1999 3:00:00 PM
From: Maverick	Respond to of 855

ML:ZD is valued at $24/shr; strong interest by potential acquirers; will be sold in 1999 Excerpts follow. 10/28/99 Investment Highlights: ú Recurring Q3 EBITDA of $37.0MM vs. $27.6MM a year ago; $6.7MM higher than our estimate. Results were helped by the shift of 2 events from Q4 a year ago to Q3. ú Upside largely from publishing segment. ú ZD expects to complete the examination of its strategic options before yearend. Co. indicated that there is a high level of interest for both the whole company and its parts. ú Management reiterated that they are seeing signs of stabilization among the top business titles. ú We estimate that ZD is worth $20/sh to $24/sh in the private market based on the public market valuation of ZDNet (ZDZ Not Rated $20 1/16) and 9-11X ?00E EBITDA for the publishing/events units. What Has Changed? Update On Sale Process: ZD is now making formal presentations to parties that have expressed interest and signed confidentiality agreements. ZD indicated that there is a high level of interest for both the whole company and its parts. We were surprised to hear that as we had thought that there was less interest for the whole company. ZD expects to complete the whole process before yearend. Expansion in Education: ZD launched SmartPlanet this week, targeting consumer online learning. It currently has 60k paid subscribers among 100k registered members. SmartPlanet lost $2.3MM in Q3, and ZD plans to spend $10MM in 2H and more next year to develop this service. ZD Education, the B2B unit, has 140k paid subscribers. While the move into consumer education should allow ZD to diversify from ad revenues, we continue to be puzzled by the timing as ZD is currently on the block. Q3 Results: ú Recurring Q3 EBITDA of $37.0MM vs. $27.6MM a year ago; $6.7MM higher than our est. Results were helped by the shift of 2 events from Q4 last yr to Q3. ú Reported EBITDA of $50.2MM included $13.3MM of gain on the sale of assets. ú Preliminary Q4 EBITDA estimate of $77MM vs. $138MM a year ago. Total revenues were up 9.7% to $232MM. Excluding the impact of discontinued titles ($6.1MM in revenues), the shift of events ($39MM) and the purchase of ZDTV this year ($3.6MM), underlying revenues were down 6.6%. Year to date, underlying revenues declined 5.2%. Interest expense was flat at $29MM as a lower average debt outstanding was offset by higher rates. Minority interest benefit of $5.5MM, largely related to Vulcan Venture?s interest in ZDTV, was posted. ZD currently had $1.17BN in debt after using the $101MM in proceeds from the sale of ZD Market Intelligence in early October to pay down debt. Cash flow from operations was $68MM in Q3 (vs. $93MM a year ago due to timing of events) and $200MM YTD (vs. $205MM). Capex was $13MM in Q3. Publishing: Revenues declined 9% to $165.3MM while EBITDA was down 26% to $17.5MM, $4MM higher than our estimate. Computer Shopper remained weak, with revenues down 39% in Q3. Excluding discontinued operations and Computer Shopper, revenues were flat. Revenues of ZD?s consumer titles were up 30%, driven by gains in ad pages at Yahoo! Internet Life (up over 60% YTD), which will raise its rate base again from 700k to 900k in 2/00. Interactive Week and Smart Reseller were also strong. International revenues were down 8%, primarily due to weakness in the UK. Circulation revenues rose 10% excluding discontinued operations. ZD education units? revenues were flat at $17MM in Q3, as the growth in B2B and consumer education units was offset by declines in journals and course wares. ZDMI, which was sold in early Oct, posted $12MM in revenues, down $2MM due to the sale of a unit earlier this year. In Q4, management expects revenues to be down 10% reported, but should be flat excluding discontinued/sold operations and Computer Shopper. Similar to what other B2B publishers are experiencing, ZD sees signs of stabilization among its 4 top titles. Computer Shopper revenues will still be down in Q4 but will be sequentially higher than Q3 or the seasonally strong Q2. Further PC Computing revenues are expected to be higher than any of the prior quarters this year, PC Week higher than Q3 or Q2 and PC Magazine could be flat vs. Q2. Events: Revenues more than doubled to $63.1MM due to the timing of N+I Atlanta and France, which were held in Q4 last year. Both events were solid. EBITDA of $22.7MM was a bit ahead of our estimate. Attendance at Seybold San Francisco was at a record high and the re-sign rate was strong. Q4 results will similarly be negatively impacted by the timing shift. COMDEX Fall, the largest trade show in North America, will be held in November and hence has a big impact on Q4. The number of exhibitors remains lower than last year, but ZD sees encouraging signs next year due to the economic recovery in Japan, easing of Y2K concerns and new product introductions led by Windows 2000. Pre-registration is up 10% suggesting strong attendance. Internet: Revs nearly doubled to $26.3MM and EBITDA of $4.6MM was $1.6MM higher than our estimate. ZDNet recorded 8.64MM unique visitors in Sept, placing it the 15 th largest web property overall. Average daily page views increased 80% YoY and 14% QoQ to 10.1MM. Television: Revenues of $3.6MM were slightly below our projection, while EBITDA loss of $11.0MM was a bit higher. ZDTV now reaches 14MM homes, up from 9.6MM at the beginning of the year and on track to meet the 16MM goal for the year. The number of advertisers has also risen 60% this year. Management expects Q4 revs to be up 50-60% and losses to be comparable to Q3.