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Ferris, Baker Watts analyst Murray Arenson wrote the following to clients outlining and reacting to Hollywood Media's 4Q '04 earnings results:


4Q04 Results: 

Hollywood Media reported 4Q results. The top line was higher than expected, at $23.7 million compared to  our expectation of $21.5 million. The bottom line loss was wider than expected, at $(0.13) per share  compared to our forecast of $(0.02) per share. The wider loss includes $0.5 million of expenses associated  with the Studio Systems acquisition that have since been eliminated.  In addition, the company had $0.7 million of expenses related to Sarbanes Oxley control requirements and $0.5 million in increased audit fees. The remaining shortfall of about $0.9 million was due to higher than anticipated expenses from the Broadway ticketing business.   

Highlights: 

In our view, the most important points were revealed in the press release and on the conference call, including: 

  • 1Q05 Guidance – 1Q05 revenues are tracking ahead of expectations following the launching of the new  Broadway.com website.  Although 1Q is a seasonally weak quarter, revenues are on pace to rival 4Q  revenues. 
  • Broadway Ticketing – At this pace, Broadway ticketing revenues for FY05 could exceed $80 million,  compared to $60 million in 2004 and our recent FY05 forecast of about $70 million. 
  • Internet Advertising – Traffic at Hollywood.com reached a record level of 5.1 million unique visitors in  February 2005, up from 1.8 million a year ago 
  • Internet Advertising – The company has already obtained advertisers' commitments for ad buys totaling  more than 60% of ad sales for all of 2004 
  • Data – The company is on track to hit a $5 million run rate in EBITDA for the data business, up from  just over $1 million. 
  • Television – Hollywood.com Television topped the 10-million subscriber mark in February 2005, about  four months ahead of schedule, including many of the country's largest markets. 
  • Television – The company can now begin implementing an advertising business model for  Hollywood.com Television with revenue expected in the second half of this year 
  • MovieTickets.com – MovieTickets.com had 5.8 million unique users in February 2005, up from 3.0  million a year ago.   

We will be updating our model and issuing a revised forecast for Hollywood Media.  We reiterate our Buy  rating.

Full disclosure: at the time of writing I'm long HOLL.

Source: Sell-side reaction to HOLL's quarter