A corporate turnaround pro I spoke with recently blamed his gray hair on his various deals -- an occupational hazard. Premature gray should be a problem at Web.com
Fourth-quarter revenues inched up from $12.3 million to $12.5 million, but Web.com suffered a net loss of $2 million, or $0.13 per share. In happier news, Web.com attracted 3,000 new net subscribers from the preceding quarter, for a total of roughly 155,000.
As its name suggests, Web.com provides websites to individuals and small business. It's a commodity business, so the real money comes from ancillary services like e-commerce add-ons, marketing via Google
To ramp up growth, Web.com says it will plow more dollars into online marketing -- a smart move, in light of the company's operating metrics. On average, it costs Web.com about $88 to acquire a customer, but over the long term, that customer generates roughly $900 in value for the company.
To grow, Web.com must find high-quality customer leads. It's off to a promising start with a push into retail channels such as Staples
Despite the company's efforts, Wall Street remains skeptical about Web.com's stock. Its shares trade at 1.3 times revenues, roughly half the multiple of the average web-hosting company. That leaves ample room for a better valuation, assuming Web.com's plans for growth pan out.
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