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  • Is Geeknet Making The Right Moves In Online Retail? 0 comments
    Dec 23, 2013 10:40 AM | about stocks: GKNT, EBAY, AMZN, YHOO

    Geek is the word that many attribute to those who fancy being curious about every innovation out on the block. Others attribute it to those who know too much about something. Geeknet Inc. (NASDAQ:GKNT) is one of the companies devoted to providing accessibility of geek stuff to tech geeks; especially devices.

    Categorized as an internet softwares and services provider, Geeknet, through its fully owned subsidiary ThinkGeek, operates as an online retailer for the global geek community. This community includes technology professionals, technology enthusiasts, and general consumers of technology-oriented and culture goods. The company sells geek-themed retail products through its web site, ThinkGeek.com.

    The Business

    ThinkGeek offers specialized products targeted to a particular class of people, geeks. Its products include electronics and gadgets as well as apparel, but are value-added, which qualifies them to be part of ThinkGeek product line-up. The company has recently increased its product line-up by adding 477 new, cool products for its customers, 98 of which are exclusive. The company's brand is also growing. Its wholesale business grew sales by 290 percent from last year. Geeknet is also working with third parties to increase customer acquisition in various segments of the business.

    Geeknet is certainly making tremendous progress towards growing its business despite having sold its media business to Dice Corporation last year. At a point, one would have questioned the company's decision to let go three components of its business including Sourceforge, Slashdot, and Freecode as of September 18, 2012. However, based on the company's current progress, it seems as though the move was the right one.

    Highlights from Q3

    In the company's most recent quarterly results, Geeknet reported $22.4 million worth of revenues, a near 30 percent increase from last year's $17.3 million. The company's net loss from continuing operations reduced significantly from $2.0 million, or $0.31 per share reported in Q3 last year, to about $1.4 million, or $0.21 per share. Even more impressive was the adjusted EBITDA, which improved from a loss of about $2.0 million last year to a loss of $831 thousand. Total cash, excluding cash from unusual items, grew from about $20 million reported last year to about $37 million. The company reported $3 million in cash collected from the sale of the media business, compared to last year's collection of $17 million. Geeknet has no debt on its balance sheet, which makes it fundamentally attractive despite its weak operating and profit margins.

    Conclusion

    Geeknet's business puts it head to head against technology giants like Google Inc. (NASDAQ: GOOG), Amazon.com Inc. (NASDAQ: AMZN), eBay Inc. (NASDAQ: EBAY) and Yahoo! Inc. (NASDAQ: YHOO). The company may not stand a chance profit-wise against these titans, but in its own capacity, it stands to grow well within the industry. Online retail has recently shown significant growth with online sales aggregated beginning on Thanksgiving Day through Cyber Monday growing by 22 percent to top $5 million. These figures excluded purchases made via mobile devices, which means the figures are quite higher. Geeknet, being an online retail company targeting geeks in software, video games, and other technology should be getting a good chunk of that cake, especially with its recent product additions, and strategic moves. Therefore, Geeknet is making the right moves in online retail.

    Stocks: GKNT, EBAY, AMZN, YHOO
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