24/7 Real Media On Steroids (TFSM)

The first quarter results for 24/7 Real Media Inc. (NASD:TFSM) are in and they were impressive, thus giving some justification for the stock to trade near its 52-week high. Total revenue for the digital and online advertising sales firm rose to $42.9 million from $29.1 million a year earlier. Operating loss was $7.2 million compared with $1.9 million a year earlier. However, adjusting for items like stock-based compensation, pro forma operating income rose from $1.3 to $3.6 million for the quarter.

Guidance for Q2 is for revenue to be in a range of $46 to $47 million, which would be an improvement of 37% over Q2 05. According to Yahoo!Finance, revenue has been rising sharply over the last three years. In 2003, the top line was $49.2 million. This rose to $85.3 million in 2004 and $139.8 million in 2005. Guidance is for revenue to be $190 to $200 million for 2006.

Shares in 24/7 dropped about 5% after hours, indicating that even very good results will not always satisfy the market.

The company is at the heart of the internet advertising industry, representing hundreds of internet properties in the sales of online advertising. As marketing dollars migrate from old media to the internet, the company stands to be one of the prime beneficiaries of the trend.

Before the after-hours drop, the stock traded at $10.89 on a 52-week high/low of $11.79/$2.84. With a market cap of $508 million, the stock trades at 3.6 times sales, hardly a high multiple for a public company in the online advertising industry.

Look for better things ahead as the movement of marketing dollars online accelerates.

TFSM 1-yr chart:

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at [e-mail].