Initiates Dividend -- But Where Will It Come From? (TSCM)

Feb.22.06 | About: TheStreet, Inc. (TST)

Eddy Elfenbein submits: Good news! (TSCM) has announced its first-ever quarterly dividend! The company is going to pay out 2.5 cents a share. Booyah! That works out to $2.5 million a year.

Hold up! Where exactly will this money come from? Aren’t dividends supposed to be from profits?

Well, the company isn’t exactly profitless. After several years of gushing money, TheStreet finally registered a profit in 2005. A whopping $246,000. Or a penny a share (slightly less actually). That’s about what a 7-11 makes.

Due to discontinued operations, that EPS number jumps to 23 cents, but it’s still hardly comforting. First, they’re discontinuing operations. They shuttered their brokerage and research businesses last year. Now they’re focusing on subscriptions for revenue, and that rose by 3% last year.

The company still has over $30 million in cash so they can pay dividends for a while. But I hope they don’t think they’re fooling anyone.

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