Why CNET Dumped It: Webshots '07 Revs Down 36 Percent

CNET (NSDQ: CNET) has filed financial data with the SEC showing what its numbers for the first three quarters of 2007 would have looked like without Webshots, which it sold to American Greeting for $45 million. The company has described Webshots as an underperforming asset; now it’s provided the numbers to back that up. Through Q307, Webshots contributed $8.4 million of CNET’s total $288.8 million top line. This is down 36 percent from the $13.1 million of Webshots revenue in the year-ago period. For all of 2006 (calculated by subtracting the pro-formas here with the numbers from last year’s 10-k), Webshots did revenue of $18.1 million. It’s not clear what full year ’07 revenue would be for the site, but it was definitely going to come in well lower than what it did last year.

Webshots will serve a different strategic purpose from American Greetings (NYSE: AM) than it did for CNET, so it’s hard to judge whether the company got a good deal. Certainly it’s understandable why CNET is happy to have unloaded it, as CEO Neil Ashe expressed during a recent conference appearance. Now that it’s in the hands of American Greetings, this info should be useful in judging whether it can be turned around.


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