Prescription Needed For Travelzoo's Dr. 'Doolittle' Bartel

| About: Travelzoo Inc (TZOO)

Travelzoo (TZOO) management is challenged in their communication skills with Wall Street. With an earnings "beat" and the possibility of a strategic deal which could be still in pursuit, we believe management's announcement of a new growth initiative starting in Q3 2012 could be a tool in their negotiations. With the stock rallying on the news in early trading yesterday morning, the conference call threw cold water on the upbeat news. Why? They completely botched their opportunity to give a clear path to their potentially exciting future.

CEO Chris Loughlin has limited credibility with the street and seems nervous and defensive on the last two conference calls. Simply put, he is not a good communicator with the financial community. We suggest TZOO start a process for a new CEO who will be able to stand up to Ralph Bartel and his death grip on the company. We also suggest they put Chris Loughlin back in marketing and business development role where he belongs.

Benchmark just lowered their target to $22 from $24. Ralph Bartel needs to wake up and smell the coffee. His baby needs vitamins and nourishment. We have attempted talking to him with credible financing sources in the past and he has played "Ostrich" with us.

ChaPaVe suggestions are as follows:

  1. Bartel can revamp management to a team capable of executing real growth in excess of 5% y/y and give them the capital to do so either through a secondary offering or a bond offering which is cheap money today.
  2. Take the company private and run it as you or the new investor group wishes, leaving the company in this state.
  3. Hire a banker, announce it and start a process to put the company in the hands of a true strategic player who will pay all shareholders a premium to today's share price.

The share price of TZOO will continue to languish until the company executes a plan as suggested above even if they "beat" expectations on earnings because you have no credible growth.

Unfortunately management has never accepted our invitations to meet with ChaPaVe to hear our proposals, we therefore believe investors should sell their shares in TZOO and repurchase them at much lower prices, if and only if Bartel and Travelzoo commit to do the right thing.

Disclosure: I am short TZOO.