Information is a powerful thing, and VA Software
That segment includes technology news sites Slashdot and NewsForge, as well as open-source software sites SourceForge and freshmeat. VA Software pulls in cash through advertising on these sites. While the e-commerce and software divisions posted respectable full-year gains in both revenues and gross margin (sales minus the cost of those sales), online media was the undeniable star. In that segment, revenues increased 78% over fiscal 2005, and gross margin rose 110%. It's now the company's most profitable division.
That's not to say that VA Software can rest on its laurels and switch to autopilot. It's facing intense competition on nearly all fronts. Technology news for industry enthusiasts has long been the company's market to lose, but Digg may already have overtaken Slashdot in mindshare, and sites like Ars Technica and several of CNETNetworks'
VA Software is taking steps to counter these threats, and recently redesigned both Slashdot and SourceForge -- the latter by running a design competition among its users. That's a cost-effective way of scrounging up new ideas, and I have to say that the resulting aesthetics and usability improvements are impressive.
Fiscal 2006 was an impressive year, and now it's up to VA Software to keep a good thing going. It seems to have a knack for figuring out what its users and customers want, and I expect the flagship services to be around for a long time -- fierce rivals notwithstanding.
For further Foolishness:
- One Fool says that Google must die.
- Small companies -- like VA Software -- are your best bet for huge returns.
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Fool contributor Anders Bylund holds no position in any of the companies discussed here, but he does contribute articles to Ars Technica. You can check out Anders' holdings if you like. Foolish disclosure is making sure that you have all the information you need.