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I'm a (for now anonymous) manager of a long-short fund which is not open to external investors. I have extensive experience on Wall Street and in the technology industry. I look for strong trends and reasonable valuations (GARP?), particularly in the technology and media sectors. Recently, for... More
  • Bankrate.com's Final Curtain Call Was an Online Advertising Horror Show 5 comments
    Jul 23, 2009 05:10 AM | about stocks: YHOO, GOOG, NWS, NYT

    Bankrate (RATE) announced that it is being acquired by Apax Partners, a private equity firm, for $28.50 per share in cash. Simultaneously, RATE preannounced that its Q2 revenues fell 23% y-o-y and its results missed consensus estimates.

    Here's what ThinkEquity said about Bankrate's Q2 results; emphasis is added by me:

     

    Q2 Preannouncement Suggests Rapidly Deteriorating Fundamentals

    Simultaneous with the announcement of the sale of the business, Bankrate preannounced preliminary 2Q09 results. The company expects 2Q09 revenue of $31.0 million (down 23% Y/Y), well below our (recently lowered) estimate of $36.2 million and the Street consensus of $37.5 million. Pro forma EPS (excluding SBC) is expected to be $0.18 per share, well below our estimate of $0.29 and the Street consensus of $0.30. Adjusted EBITDA is expected to be $9.4 million, also well below our estimate of $12.8 million.

    As we highlighted in our June 15 research report, we believe that traffic trends during Q2 were relatively anemic, based on our analysis of multiple third-party audience measurement data sources, compounding a difficult financial advertising environment in general, continued deterioration of the credit cards business (due to more stringent approval standards by card issuers), and seasonality in the insurance business.

    Now, it appears that top-line fundamentals were weakening even more rapidly than we had expected. Given the apparent abruptness of fundamental deterioration, we believe management probably made the right call in taking the company private.

     

    Themes: online advertising Stocks: YHOO, GOOG, NWS, NYT
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This post has 5 comments:

  •  
    This decline in second quarter revenue is depite their new website which actually seemed fuller than what it was during first quarter. I think their display advertising was not so much down as was their credit card and mortgage lead generation segment and thus could be a problem related specifically to comapnies dependent on financial advertisers (read: credit card and mortgage providers) rather than the advertising industry per se. But anyways, given that share price would have anyways tanked 20-30% in the light of dismal 2Q resultsI, think it was a good deal depsite a meager 16% premium.
    Jul 23 06:01 AM | Link | Reply
  •  
    Wonder how much of the overall online advertising market is financial...

    On Jul 23 06:01 AM User 395737 wrote:
    > I think their display advertising was not so much down as was their
    > credit card and mortgage lead generation segment and thus could be
    > a problem related specifically to comapnies dependent on financial
    > advertisers (read: credit card and mortgage providers) rather than
    > the advertising industry per se.
    Jul 23 07:04 AM | Link | Reply
  •  
    Sorry, ampsucker, but Bankrate is one among HUNDREDS of websites offering competitive rate/term info. Konspiracy theories aren't gonna cut it.
    Jul 23 05:12 PM | Link | Reply
  •  
    I agree with Paul in NJ. Anyone can scrape rates and publish on the web.

    They'll definitely do something with the brand since it has the recognition. I'm very interested in any ideas about what that might be.

    ~Andrew
    Jul 24 04:29 PM | Link | Reply
  •  
    I would beg to differ from Paul in NJ. I think assimilating information on thousands of financial products across all US states is more easily said than done and I think RATE is doing a good job at it.Consumers are flocking to RATE for information and there is no dearth of prospective audience. Once the advertising environment improves (and it will improve eventually), APAX partners will make big bucks on their investments. To add this, their new website with several new features further increases its appeal amongst advertisers. Its too easy to get drenched in pessimism when everything around you is so bad, but try to see the big picture here.
    Jul 30 11:50 PM | Link | Reply
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