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I’ll give you 3 hints:

1. This stock is trading at a 52-week high;

2. The company is profitable;

3. The company operates dozens of websites and sells software that powers hundreds more.

Introducing Internet Brands (INET):


You probably know its ticker symbol – INET – from the days when Instinet was a publicly traded company. But now INET stands for Internet Brands, which owns all of these websites:





Money and Business


Travel and Leisure

That’s a serious collection, generating over 55 million unique visitors and over 700 million page views in January 2010, according to the company. More than 97% of traffic is from nonpaid sources. These consumer sites generate a little over 2/3 of INET’s revenues, primarily through cost-per-thousand [CPM], cost-per-lead [CPL], cost-per-action [CPA], and cost-per-click [CPC] advertising. Internet Brands just might be the world’s most successful affiliate marketer.

INET’s remaining revenues come from selling vBulletin software, the leading solution for web-hosted forums, and AutoData, a series of solutions for automobile dealers.

Between these operations, Internet Brands made $.28 per share ($.27 fully diluted) on just under $100M in revenues.

A few problems

I’m long INET, but there are a few things that give me pause.

  • Revenues dropped year-over-year. That’s not a good trend, especially because the company bought a number of web properties last year. It looks like the consumer automotive sites were the culprit, with CPA and CPL payments from auto dealers down over $13M year-over-year. Not surprising given the environment.
  • Dual shareholder classes adversely affect public shareholders. Idealab’s Class B shares control over 60% of the vote.
  • There is an overhang of locked up shares that will be eligible for resale in the coming months.

Bottom line

Though not an overwhelming value, Internet Brands has a lot of promise and appears to be executing well. It’s scale is unique among aggregators of small content sites, and should help it attract larger advertisers and improve search engine optimization. As long as Internet Brands’ stock keeps chugging along, it will have a place in my portfolio.