Easy as A, B, CNET

When is an earnings report not an earnings report? Last night, CNET Networks (Nasdaq: CNET) provided a second-quarter report that included a glimpse into the company's top line and current cash balance, but little else on the way down to the bottom line.

As one of the dozens of companies under investigation for backdating stock options, and currently auditing past financials for potential restatements, CNET had to settle for a quarterly peek without any of the line-item frills like operating profits or net income.

We do know that CNET grew its revenues by 14% to $92 million over the months of April, May, and June. The top-line growth was twice as great as analysts were expecting.

There's no time frame for when we'll see CNET's financials au naturale, though any restatements won't impact the company's previously reported revenues, cash levels, or non-GAAP profitability. It would be nice to color in the clouds of uncertainty in a different shade than gray, but penny-pinchers can't be choosers. You don't expect to snap up shares in a company like CNET at half the price it fetched six months ago without some strings attached. You just have to hope that those strings aren't attached to a fibbing Pinocchio.

I caught up with CNET CEO Shelby Bonnie after last night's earnings report. Despite the company's pressing challenges, draping an income statement in a burqa isn't enough to keep the growing provider of online content sites down. He's got a good story to tell, and if you're up for the risks involved in picking up a distressed stock trading in the single digits, it doesn't hurt to listen.

Yearn to learn, if not earn
If you're not familiar with CNET, the company is about far more than the namesake site that specializes in editorial reviews for consumer electronics gadgetry. It's also home to sites like video-gaming hub Gamespot.com, tech-news resource News.com, and photo-sharing site Webshots.com.

CNET is rich in valuable domain names. Some of them are developed, like Download.com and MP3.com. Others are waiting for a little something more, like Search.com or Radio.com.

One thing that CNET has been doing brilliantly: snapping up popular sites that can be rolled up into one of its valuable pieces of undeveloped dot-com real estate. A television community magnet like TVtome.com became TV.com. Restaurant-review haven Chowhound is about to move into Chow.com. I mention this only because I thought I finally had Shelby in a corner last night. One of the company's latest acquisitions is UrbanBaby.com, a resource site for mothers of young children. The site is rolling out city guides to provide localized content, and I was chuckling because I know that Baby.com is owned by Johnson & Johnson (NYSE: JNJ). There's no way that CNET will be able to pry that four-letter word from the "No More Tears" baby shampoo giant.

"We own Kids.com, though," Bonnie said without skipping a beat, and I was thrown for a loop again.

Unless UrbanBaby.com is building brand equity on its own -- and it seems to be, given recent favorable media coverage -- you can already picture it being rolled into Kids.com, a landing page that currently features nothing more than an ad farm for sponsored contextual links.

Until that revelation, I was wondering whether UrbanBaby would be better served as an expansion to the mating wingspan of The Knot (Nasdaq: KNOT), since the site almost feels as if it's being groomed for the content-backed, lead-generating model that The Knot has perfected over the years.

Shelby calls UrbanBaby a "broader lifestyle play," but it follows the company's theme of snapping up leading sites in areas where passionate users congregate. Whether it's the diehard gamers at Gamespot, the computer whizzes at Tech Republic, or the freshly acquired fans of the boob tube, fine dining, or their babies, CNET is there.

Hitting 'em where they ain't
CNET isn't like most online publishers. I accused Shelby of committing paid search suicide, diving into areas like music and television (where low-paying keywords run rampant), and emphasizing community-driven sites where ad blindness produces pathetic clickthrough rates.

But we both know that CNET doesn't play those games. CNET is modeling itself after cable television conglomerates like Liberty Media (Nasdaq: LBTYA) and Viacom (NYSE: VIA), which won over mainstream advertisers by launching niche programming that provided perfect consumer targeting compared to the catchall major networks. CNET's advertisers are consumer brands, and they're loyal to CNET. The 100 largest customers on CNET in the March quarter, accounting for 55% of the company's ad business, all renewed for the June quarter.

Per his quest to be the one name that matters in fanatic circles, Shelby says, "I don't think there's a lot of room for mediocrity." He'd rather pursue loyal niches of users than chase high-paying keywords.

That said, CNET.com also attracts consumers looking to make wallet-widening buying decisions. UrbanBaby will be a teething ring for young parents in a vulnerable state, encouraging them to spend liberally on their newborns and toddlers. One of CNET's latest buys is one of the three most popular automobile sites in China. Think about that one for a bit. A car site in a booming economy where many are about to make their very first auto purchase? I want you to yuan me, baby.

We don't know what CNET earned, but we do know what it learned. It's quietly piecing together one of the more impressive collections of web-based properties.

I've recommended CNET to Rule Breakers newsletter subscribers twice over the past year. I may have been a bit early with last year's nod, but I think my timing is right with last month's re-recommendation. The storm cloud of accounting irregularity will pass. It may not be an ideal resolution, but it will be settled. Couple that with the video-game and computer-industry advertisers -- who are waiting for the next generation of video game consoles and Microsoft (Nasdaq: MSFT) Vista to be released later this year to ramp up their pent-up marketing budgets -- and things will only get better.

Gray clouds? Meet the Crayola box.

CNET and The Knot are active recommendations in theRule Breakersgrowth stock newsletter service. Microsoft has been singled out toInside Valuereaders. Johnson & Johnson is anIncome Investorpick.

Longtime Fool contributor Rick Munarriz is a fan of CNET, but he does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.