CNET Networks’ net losses grew from $1.3 million in Q106 to $9.1 million this time around, thanks in part to costs of $4.4 million paid to auditors, accountants and general counsel associated with investigating a stock options scandal. The company had restated financial statements between 1996 and 2005 after discovering irregularities in stock options practices. But quarter revenue grew 10 percent to $92.1 million. Without the investigation costs, operating income was $11.8 million – up 18 percent from Q106’s $10 million figure. Accounting for those costs, operating income was $7.3 million.
— While average monthly users was up 23 percent from the corresponding 2006 quarter to 144 million, average daily page views fell 18 percent to 81 million, suggesting CNET’s sites are attracting more visitors but they are not hanging around as long.
— CNET said 96 percent of its top 100 advertising customers renewed their contracts during the quarter, however.
— CNET expects annual revenue between $425 million and $445 million. Including $23 million in stock compensation, operating income is expected between $23 million and $38 million, while operating income before depreciation, amortization, and stock compensation expense is expected to be between $90 million and $105 million.
CEO Neil Ashe said in the earnings call: “We will be focusing less on Webshots as a property. Although it has not met our financial expectations, Webshots is a leading photo sharing site and and an important part of our network. A smaller, reconstituted team will be focused on realizing the potential of this brand.” The photo-sharing site, which relaunched last year and added video functionality, is now rivaled by the likes of Flickr and Photobucket. Ashe said CNET needed to invest in its products and will continue to add new properties; it had noted particularly strong growth in the UK, China and France after rolling out sites there.
Separately, CNET announced the appointments of Visa EVP and CMO Susanne Lyons and former MTV Networks COO Mark Rosenthal to its board of directors.
Earnings release | Webcast | Transcript (SeekingAlpha.com)