Last night, CNET Networks
I caught up with CEO Shelby Bonnie shortly after the report to go over the company's quarter and its vision for the future.
Shelby, after breaking even in the March quarter, the company is looking to earn $0.02 to $0.03 a share in the current quarter. However, CNET is looking to earn between $0.20 and $0.23 a share for all of 2005. What is so exciting about the second half of the year to warrant so much enthusiasm and profitability?
"One thing is the seasonal nature of our business, especially in the fourth quarter," he explained, singling out how many of the company's sites bring out the best in holiday shoppers -- and related sponsors. CNET is "building momentum" throughout its network, and that will continue to bear fruit through the second half of the year and beyond.
Over the past year, page views more than doubled, yet revenues grew by just 18% this past quarter. How do you explain this to someone who doesn't understand the concept of an online publishing company?
"Well, our interactive revenue was actually up by 23%," he said. It's a fair clarification. The company's former stronghold of traditional publishing has been whittled down to just 8% of revenues, and that fading segment's decline helped sandbag CNET's true top-line showing. However, it still represents a fraction of the traffic increase.
"Back in 2001, analysts were asking us how low we could get advertising as a part of revenue," he reflected. How times have changed. With companies like Google
The company's gaining traction -- and eyeballs -- but it's not a simple one-year plan. "We're playing for a five- to 10-year market," he added.
Back in the final sudsy days of the dot-com bubble, when venture capital was drying up for online sites, a lot was made about dot-coms relying too heavily on dot-coms as advertisers. They were about to become a credit risk. This past quarter, CNET's new sponsors include Delta
"My sense is that everybody is good for it," he answered, before reflecting on the importance of the company's ability to grow its base of subscribers -- a step in a financially healthier direction that has landed the company many traditional advertisers like Pepsi
Tomorrow, we will conclude our Monday evening discussion with Bonnie by getting into bandwidth, expansion, and the company's acquiring ways -- potentially making it a buyout candidate itself.
Some recent glimpses at CNET:
- Last month, I singled out CNET as a "10 Stocks Under $10" recommendation.
- I also interviewed CEO Shelby Bonnie after the company's December quarter.
- CNET recently let the world know that it means business.
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. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.