JUPM touts organic growth, but skeptics remain

| About: Jupitermedia Corp. (JUPM)
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Jupitermedia (ticker: JUPM) CEO Alan Meckler describes how his company's latest Internet venture is "an example of terrific organic growth for virtually no cost". Here are his comments, with a reposte by a doubtful Ben Silverman of FindProfit.com:

Alan Meckler writes:

How would you like to create $1 million of revenue virtually overnight?

We just did this at Jupitermedia. We created a new stock photo Web site called Comstock 1700k Subscription Plan in about 8 working days. We populated the site with Comstock stock photo images that were selling on a pay per download basis - in other words we had no inventory expense in populating the new Web site - only a manpower expense of several developers working several days. We used existing software created by our Tucson image subscription team...

We launched the site a few weeks ago and sales are moving in on $20,000 per week and building. Our promotion effort was nothing more than running banners on our various image Web sites as well as some of our developer sites in the JupiterWeb network.

This is an example of terrific organic growth for virtually no cost. It is also an example of how amazing the Internet is as a distribution channel. No promotion cost, no inventory cost and very little effort...

Ben Silverman of FindProfit.com responds:

Organic growth has been the main issue of concern at Jupitermedia, so Meckler's post isn't just about hyping a new product. Meckler does a great job of rolling up companies, and finding good assets on the cheap, but you've got to be able to grow your legacy business, something Jupitermedia hasn't been able to do.

"On [its fourth quarter earnings conference call], Jupitermedia said it expects organic growth to be roughly 15% for the coming year. We think that estimate is high, and it appears that current guidance assumes perhaps 8% to 12% organic growth off the current revenue base, if not slightly lower after adjusting for recent acquisitions. This again supports our thesis that Jupitermedia's legacy businesses lack the operating momentum necessary to support the company's frothy valuation, and that growth is being almost entirely driven by the images rollup," my boss, Bill Martin, wrote in FindProfit.com's recent analysis...

Wall Street (ok, the two analysts covering the company) is pegging Jupitermedia's 2005 revenues at about $110.5 million, so a couple of new products like the one just launched could add a few percentage points to the company's topline. This is a good start, but Jupitermedia is going to really need to rev up that organic growth engine to get the stock moving again.

JUPM chart below.