Time to throw Mamma.com (NASDAQ:MAMA) from the train? The company's prospects continue to dim after the search-engine specialist posted a loss last night for its long-awaited December quarter. Losing $0.05 a share reversed a profitable showing a year earlier. Revenues rose by 27% to hit $3.9 million -- yes, million -- but because shares outstanding have nearly doubled over the past year, the top line actually fell significantly on a per-share basis.
The upside of these freshly minted shares is that the company is now sitting on $20.6 million in cash -- making up a little more than half of its market cap. That cash mattress will be far more compelling if Mamma returns to profitability and gets past the Securities and Exchange Commission probe that examined stock manipulation at the company and its auditor bailing back in February. As it stands, in the still-unreported March quarter, the company spent what appears to be a quarter of its revenue on legal, press release, and auditing expenses. That's not good.
The company did close out the year at a profit, true, but that was mostly due to a favorable tax-related charge. It's an uphill battle from here to win back the investing public.
Mamma took shareholders on a wild ride last year, peaking as high as $16 in April 2004. With a thin float producing exaggerated swings, the stock is down to around $3 these days.
It's a shame that paid search hasn't been profitable enough to raise all of the ships floating in the search-engine sea. Heavy hitters Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) stand well above their peers, and many second-tier players like Ask Jeeves (NASDAQ:ASKJ) and Infospace (NASDAQ:INSP) have also produced impressive profitability. So while one shouldn't shut the door entirely on Mamma, there are plenty more attractive, and profitable, fish in the paid-search ocean.
Want to read some more Mamma bedtime stories?
- Read all about Mark Cuban's Mamma.
- There are concerns about the company's share dilution.
- A lot of concerns about that dilution, actually.
Longtime Fool contributor Rick Munarriz loves his mama -- but not his Mamma.com. 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.
