Online health-care portal WebMD
Revenues in Q2 increased 38% to $56.6 million, while the net loss improved from $1.6 million, or $0.03 per share, to $1.2 million, or $0.02 per share. Wall Street analysts expected revenues of $55 million and a net loss of $0.06 per share.
WebMD's ambitions are clear: It wants to dominate online health-care services for consumers, physicians, and health-care professionals. Its offerings are already extensive; the company owns the public portals webmd.com, medicinenet.com, and rxlist.com, as well as private-label portals for companies including Verizon
The bulk of WebMD's revenues come from advertising and sponsorships, which increased 36% to $36.2 million. The next largest category is private-label licensing, which surged 49% to $12.3 million.
So what's the problem? Simply put, WebMD's content can be replicated. Fierce competitors such as Healthline and HealthCentral already have rich libraries of content, and they've recently landed venture funding from major investors, including Sequoia Capital, the original investor in Google
Competition may prove troublesome, because WebMD relies on key partners such as Time Warner's
However, the economics of the Internet are undergoing some wrenching changes as major Web properties realize the value of their traffic. Look at Monday's deal, in which Google agreed to pay $900 million to provide search and text ads to News Corp.'s
With AOL's recent move to end subscriptions for broadband users, WebMD needs to keep finding ways to boost revenues. When asked about the AOL development on the earnings conference call, WebMD made no comment. But it's hard to imagine that WebMD will score a good deal, especially since it has well-financed competitors who would certainly want to be on AOL.com. Investors, tread carefully.
Fool contributor Tom Taulli does not own shares of companies mentioned in this article.