Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: Reporting on TheStreet.com's recent quarter reads like A Tale of Two Companies. From TheStreet.com's own writeup of its earnings, written by TheStreet.com Staff Reporter Nat Worden, one would think the company posted a quarter filled only with positives. Here they are: the company earned its most ad revenue in six years ($3.7 million), nearly doubled its prior-year period EPS (from $0.06 to $0.11) and reported net income of $3.1 million on overall revenues of $12.9 million (up from $8.2 million a year earlier). Additionally, TSCM posted a 77% gain in advertising revenue, a 49% gain in revenue from subscriptions to premium services and "other" revenue increases of 108%. Based on TheStreet.com's writeup, the fact that shares plunged $1.80, or nearly 15%, on more than five times the normal volume, makes little to no sense. In Reuters' writeup, TheStreet's recent quarter is viewed as being essentially "in-line," with EPS matching Thomson Financial consensus estimates and revenue coming in at just a shade over expectations. Furthermore, analysts quoted in the Reuters piece (something TheStreet's piece failed to include) had the following to say: "In a note to clients, Avondale Partners downgraded its rating on the company to 'market perform' from 'market outperform', primarily citing decelerating traffic and declining subscriber metrics. Analyst Frank Gristina noted page views increased 51 percent over the year-ago period but were down 10 percent sequentially and this could impact advertising revenue." And David Jackson noted that "the Cramer Mad Money effect that has benefited TSCM's stock seems to be waning."
Related links: TheStreet.com Q3 2006 Earnings Call Transcript • David Jackson Says the Cramer/Mad Money Effect is Waning • CNET's Traffic Collapse and TheStreet.com • The Short Case for TheStreet.com • TheStreet.com Q3 Profit Nearly Doubles [paidcontent.org] • Thomson to Sell Unit, TheStreet.com's Q3 Results Disappoint [Yahoo! Indie Research]
Potentially impacted stocks and ETFs: TheStreet.com (TSCM), Morningstar (NASDAQ:MORN), Value Line (NASDAQ:VALU), FactSet Research Systems (NYSE:FDS), Track Data Corporation (OTCPK:TRAC), Interactive Data Corp. (Pending:IDC), EDGAR Online (NASDAQ:EDGR)
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