What Happened to Tucows?

In early August, Tucows (TCX) dropped sharply following their second quarter earnings release. Tucows's decline was joined by other domain related stocks which also logged double digit percentage declines in August.

Since second quarter earnings, the company has been relatively quiet with a few notable items:

Tucows appointed Bill Sweetman as General Manager of its domain name portfolio. In his role, he will be dedicated to improving the quality and profitability of the Tucows domain portfolio. This can be viewed as a positive step towards more effectively monetizing their domain assets.

On September 14, Tucows CEO Elliot Noss purchased 20,000 shares of TCX on the open market at $1.05 per share. Over the years, he has been a steady buyer of Tucows shares and the most recent purchase shows a vote of confidence in the company's long term prospects.

In other ongoing developments:

Tucows had acquired wholesale domain registrar ItsYourDomain.com (IYD) in late July. IYD had roughly 700,000 domains under management and offers services through a network of over 2,500 affiliates. There have been no updates on the integration, but at the time it was expected to add approximately $7 million in yearly revenue and $1- $2 million in adjusted net income in the first 12 months.

Tucows had announced a reduction in their wholesale pricing. This has been implemented and extended to .mobi and .name domain names.

With the third quarter drawing to a close, it's difficult to difficult to determine how the acquisition, the price decrease, and other possible nonrecurring items such as domain name sales might affect results. However, in the second quarter earnings release, Tucows had reiterated their expectation for $10 million in operating cash flow for 2007. The year to date operating cash flow at June 30 was $3.5 million. This leaves at least $6.5 million of operating cash flow for the remaining two quarters.

Trading volume has declined since the drop and the stock price has stabilized in a range slightly below the $1.00 mark.

Disclosure: Author has a long position in TCX

Comments

[Long-ShortGuy]

Any update? The stock is now at 65c. What are your thoughts on it?