Can't say for sure but here is part of the 10Q. You can find the full article on Yahoo finance news.
Current State of the Company
The Company's total net revenue for the three-month period ended September 30, 2005 increased approximately 6% to approximately $8.2 million, as compared to approximately $7.7 million for the three-month period ended September 30, 2004. The Company's total net revenue for the nine-month period ended September 30, 2005, increased approximately 4% to approximately $23.8 million, as compared to approximately $22.8 million for the nine-month period ended September 30, 2004. The Company's reported net income from continuing operations for the three- and nine-month periods ended September 30, 2005 increased approximately 216% and 177%, to approximately $1.4 million and $4.0 million, respectively, as compared to approximately $0.4 million and $1.4 million, respectively, for the three- and nine-month periods ended September 30, 2004. With respect to overall expenses, during the three-month period ended September 30, 2005 as compared to the three-month period ended September 30, 2004, online marketing expenditures, as well as salaries and related expenses, decreased, while non-employee contributor payments, and consulting and recruiting fees increased. During the nine-month period ended September 30, 2005 as compared to the nine-month period ended September 30, 2004, online marketing expenditures as well as salaries and related expenses, decreased, while non-employee contributor payments, legal fees and consulting costs increased. As a result, total operating expenses decreased by approximately 4%, to approximately $7.0 million, for the three-month period ended September 30, 2005, and to approximately $20.3 million, for the nine-month period ended September 30, 2005, as compared to approximately $7.4 and $21.6 million, respectively, for the three- and nine-month periods ended September 30, 2004.
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Subscription revenue for the three-month period ended September 30, 2005 increased by approximately 1% to approximately $5.8 million, as compared to approximately $5.7 million for the three-month period ended September 30, 2004. Subscription revenue for the nine-month period ended September 30, 2005 decreased by approximately 2% to approximately $16.6 million, as compared to approximately $16.8 million for the nine-month period ended September 30, 2004. The increase for the three-month period ended September 30, 2005, as compared to the three-month period ended September 30, 2004, was attributable to subscription revenue growth for several products, including Action Alerts PLUS and TheStreet.com Stocks Under $10, more than offsetting declines in Street Insight, TheStreet.com Value Investor, TheStreet View, The Telecom Connection and RealMoney.com. The decrease for the nine-month period ended September 30, 2005, as compared to the nine-month period ended September 30, 2004, was attributable to decreases in subscription revenue for several products, including TheStreet View, Street Insight, RealMoney.com, TheStreet.com Value Investor, and The Telecom Connection, which more than offset growth in TheStreet.com Stocks Under $10 (launched in May 2004), Action Alerts PLUS and RealMoney Pro Advisor.
Since subscription revenue increased slightly during the third quarter of 2005, compared to the third quarter of 2004, we believe that the slight year-to-date decline in subscription revenue over the previous year was caused primarily by the negative market sentiment that prevailed during the first quarter and part of the second quarter of 2005. A more relevant indicator of near-term expectations for subscription revenue, we believe, is the increase in subscription revenue of $0.5 million, or 9%, for the third quarter of 2005, compared to the previous quarter. We believe this increase was caused by several factors. First, strong deferred revenue in the previous quarter (a function of subscriptions that have been sold but not yet recognized as revenue) led to subscription revenue growth as this revenue was recognized. Second, the Company experienced strong growth in both page views and unique visitors during the quarter due to its success in (i) signing and implementing agreements with large, high-traffic portal companies to direct users to its web sites, (ii) promoting its brands, products and services through contributor James Cramer's television and radio programs, and (iii) introducing new content on its free, flagship web site to expand its appeal to a broader audience. These and other efforts, we believe, helped the Company to grow its base of paying subscribers by approximately 7,500 from the previous quarter and 7,600 from the third quarter of 2004.
In order to take advantage of these trends, during the remainder of 2005, the Company plans to increase its online advertising spending to promote its services and to continue to expand its use of co-marketing arrangements that do not require up-front customer acquisition expenditures. Because the Company's online advertising contracts generally have the short terms and early cancellation provisions typical of the industry, the Company is able to adjust its expenditures on a weekly or monthly basis, depending on the return-on-investment of the campaigns. As a result of the foregoing, we expect the Company's sales and marketing expenditures for the remainder of 2005 to increase from third quarter levels, although overall sales and marketing expenditures for 2005 are likely to remain below 2004 levels.
Advertising revenue increased by approximately 26% in both the three- and nine-month periods ended September 30, 2005, to approximately $2.1 million and $6.3 million, respectively, as compared to approximately $1.7 million and $5.0 million, respectively, for the three- and nine-month periods ended September 30, 2004. Additionally, although seasonal factors typically cause the Company's advertising revenue to decrease in the third quarter, as compared to the second quarter, advertising revenue actually increased by 1%. These increases in advertising revenue were primarily attributable to continued improvements in the online advertising market, the successful overall performance of advertising campaigns delivered by the Company, the Company's sophisticated advertisement-serving capabilities, which allowed the Company to serve a variety of advertising formats, and by an increase in the number of unique visitors to the Company's web sites and the addition of content to the Company's free, flagship web site, both of which helped to increase the number of page views generated by the Company's web sites. The Company plans to continue to add content to its free, flagship web site in addition to its subscription-based products in an effort to increase page views to take advantage of the current positive trends in the online advertising market.
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On January 12, 2005, the Company announced the hiring of Allen & Company LLC ("Allen"), a New York investment bank, to assist its Board of Directors in considering possible strategic alternatives for enhancing stockholder value. No decision has been made as to whether the Company will engage in, and no definitive agreement has been executed with respect to, any transaction or transactions resulting from the Board of Directors' consideration of strategic alternatives. The principal portion of Allen's compensation for this engagement is contingent upon the successful completion of a transaction.
On June 28, 2005, the Company committed to a plan to discontinue the operations of its wholly owned subsidiary Independent Research Group LLC, which operated its securities research and brokerage segment. Over the past two years, the Company invested heavily to expand IRG Research's staff and product offerings in an effort to grow its revenue, with the ultimate goal of bringing the firm to profitability within a set timetable. The Company explored a range of alternatives, but in light of recent market forces, which have driven industry consolidation and resulted in increased competition, the Board of Directors committed to a plan to discontinue the segment's operations rather than continue to expend resources in an increasingly challenging environment in which the profitability timetable would likely not be met. The plan included the termination of approximately 40 employees and the termination of various contracts, including a lease for office space. This plan has been largely completed, with approximately $1.5 million of the cash portion of the anticipated charge paid as of September 30, 2005, with minimal future payments anticipated. See Note 6 to the Company's Consolidated Financial Statements.
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