October 26, 2012
What: Shares of Web.com Group (Nasdaq: WWWW ) lost as much as 14% today, after reporting a mixed earnings report.
So what: Third-quarter adjusted earnings per share were $0.41, which was $0.02 ahead of estimates and adjusted revenue of $124.2 million beat the $121.7 million that analysts expected. The issue is that GAAP loss was $21.5 million, or $0.45 per share and GAAP revenue was only $105.8 million, which is well below the adjusted numbers.
Now what: This is the third straight quarter Web.com has had huge gaps between GAAP earnings and adjusted earnings, which should be a warning sign for investors. Adjusted earnings are supposed to be adjustments for one-time items, but this just looks like a recurring series of costs, like restructuring and fair value adjustments. I'm not buying today, and wouldn't until I see some clear GAAP earnings improvement.
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