CNET Networks, Inc. (Nasdaq:CNET): -- Total Revenues of $92.0
million -- Cash Balance of $143.3 million -- 116.2 Million Monthly
Unique Users CNET Networks, Inc. (Nasdaq:CNET) today reported
revenue results for the second quarter ended June 30, 2006. "We are
pleased with the growth of our business during the second quarter,"
said Shelby Bonnie, chairman and chief executive officer of CNET
Networks. "We continued to expand our audience and customer base
across the U.S., Europe and Asia by growing our core brands and
adding new ones, enhancing our position as Internet ad spending
continues to increase." -- Total revenues for the second quarter
were $92.0 million, a 14 percent increase compared to revenues of
$80.4 million for the same period of 2005. Revenues for 2005 and
2006 exclude revenues related to Computer Shopper magazine, which
was sold in the first quarter of 2006 and consequently has been
treated as a discontinued operation in our financial results in
both periods. -- Cash balances, which includes cash, investments
and restricted cash, at the end of the quarter were $143.3 million,
compared to $138.5 million at March 31, 2006. -- As previously
announced, the company's Board of Directors has established a
special committee of independent directors to review the company's
stock option practices and related accounting. The special
committee has reached a preliminary conclusion that the actual
measurement dates for certain past stock options granted by the
company differ from the recorded measurement dates. Accordingly,
the company will be required to restate certain previously issued
financial statements to record non-cash charges for stock-based
compensation. The company does not expect that the anticipated
restatement will have any impact on its previously reported
revenues or cash positions. The company will not be in a position
to provide operating expense, operating income, net income or
earnings per share information on a historical basis or as part of
its business outlook pending the completion of the special
committee's review. Further information regarding these matters is
set forth in the company's Current Report on Form 8-K filed July
10, 2006. Business Review "Our focus during the second quarter was
on expanding our portfolio with smart additions that leverage our
expertise in building global brands for people and the things they
are passionate about. We are beginning to capitalize on lifestyle
media categories and through the re-launch of Chowhound and the
acquisition of Urban Baby, we are gaining great, established brands
in the food and parenting categories. We also acquired xcar.com.cn
in China, building on our strong presence in China while expanding
our footprint into the automobile market," said Bonnie. -- CNET
Networks' global network of Internet properties reached an average
of 116.2 million unique monthly users during the second quarter of
2006(1), an increase of 1 percent from the second quarter of 2005.
Average daily page views were over 92.8 million during the second
quarter(1), down 5 percent from the year-ago quarter. -- CNET
Networks entered two lifestyle categories during the second quarter
of 2006 -- food and parenting -- that align directly with its goal
to provide brands for people and the things they are passionate
about. Through the well-received beta re-launch of Chowhound
(www.chowhound.com) following the acquisition of that site during
the first quarter, and through the acquisition of Urban Baby
(www.urbanbaby.com), the company expects to expand its demographic
profile and its appeal to new advertising segments. -0- *T -- In
the third quarter of 2006, CNET Networks plans to build on this
positive entry into the food category by launching Chow
(www.chow.com), which will be Chowhound's parent brand, bringing
the established food community together with renowned original
content. Chow's goal is to be a different kind of food site "for
those who live to eat." In June, the company re-launched Chowhound,
the community of people who doggedly seek out amazing food and
drink experiences, then share the treasures they find. The new
Chowhound, with dramatic improvements, from its new look and feel
to new features and functionality, was enthusiastically received by
its discerning community. -- In May, the company entered the
parenting category with its acquisition of Urban Baby, a stylish
insider's guide to what's new for busy expecting and new moms.
Combining original and member-contributed content, Urban Baby arms
new moms with timely and useful information on what to buy and what
to do. Launched out of New York City, Urban Baby has a local
community focus and plans to expand into new markets. Urban Baby
enhances CNET Networks' reach into the female demographic. The
company plans to re-launch the site later this year. *T -- During
the quarter, CNET Networks expanded its established presence in
Europe and Asia with launches and acquisitions of interactive media
properties that target passionate audiences in some of the
fastest-growing global markets. -0- *T -- In China, CNET Networks
acquired xcar.com.cn, one of the country's leading online
automobile destinations that provides independent reviews and
information for consumers considering car purchases. This
acquisition, which closed in July, builds on CNET Networks'
established online presence in China, and positions the company to
benefit from the nascent, yet fast growing, automobile market in
China. -- In Europe, the company launched localized versions of
some of its popular United States sites, responding to increasing
user and advertiser demand in key markets. In April, CNET Networks
launched a localized version of the site, uk.gamespot.com. With its
pre-existing market, GameSpot UK has become one of the leading UK
gaming sites. It offers gamers the benefit of localized content,
while enabling UK gaming and consumer advertisers reach into this
valuable, geographically targeted audience. A similar localization
approach was taken with the launches of CNET CarTech.fr and News.fr
in France, translating the value and relevance of CNET Networks'
CarTech and News.com sites to the passionate, fast growing online
audiences in France. *T -- CNET's new video-on-demand (VOD)
service, CNET TV (www.cnettv.com), launched in beta online last
month and has received enthusiastic response from users, both via
their feedback on blogs and as represented by the time spent on the
site. The site's interface features a virtual remote control that
lets users browse video content by channel, create personalized
playlists, start and stop videos, and set viewing preferences, such
as switching to a full screen environment. CNET TV online is part
of a two-phased VOD roll-out aimed at both enhancing the CNET user
experience and introducing the CNET brand to more people through
new channels. CNET achieved an important step toward the latter
goal earlier in the month when its video content launched with
partners Cox Communications and TiVo, Inc through their on-demand
services. CNET TV is expected to officially launch, complete with
advertising, during the third quarter. -- During the quarter,
Webshots launched AllYouCanUpload.com, a service that provides free
unlimited photo uploading and hosting without the need for
registration. AllYouCanUpload leverages Webshots' powerful
technology infrastructure, letting users upload up to 10 images at
a time with no limits on size of photos, and automatically
generates codes to display images that can be pasted into popular
social networking, blog, and auction sites. AllYouCanUpload is
designed for people seeking a quick, easy, one-click solution for
hosting images. Users interested in a more robust experience,
including archiving photos for future use, have the option of
registering for a free Webshots.com account. -- GameSpot had an
active second quarter, with continued momentum and growth in its
presence at the Electronic Entertainment Exposition (E3), and
increased user traction and sponsorship interest in its gaming
tournaments. -0- *T -- During E3, users watched nearly 18 million
on-demand video streams, and page views to the GameSpot site
increased by nearly 32 percent compared to page views during the
2005 E3 conference. GameSpot's exclusive online coverage of the
Sony PLAYSTATION 3 press conference, and its live streaming of
Nintendo's Wii press conference contributed to its unprecedented E3
success. -- GameSpot's multi-player online gaming tournaments have
begun to gain traction among users and the interest of sponsors.
GameSpot has been hosting a new tournament each month, such as
Nascar Petal to the Metal Challenge, Operation: Sniper Storm
Tournament, and Battle of Nations with hundreds of participants and
tens of thousands of spectators. In response to the success and
demand for tournaments, Game Spot will increase their frequency. *T
-- CNET Networks' brands continued to receive awards and accolades
during the second quarter, including several prestigious Webby and
Maggie awards. -0- *T -- In April, the company won four "Maggie
Awards" for its outstanding editorial content as part of the 55th
Annual Western Publications Association (WPA) award event. CNET
News.com won Best Publication Website/Consumer; CNET.com won for
Best Regularly Featured Web Column/Consumer; and CNET.com and CNET
News.com tied for Best Web Article/Consumer. -- In May, CNET
Networks won three People's Voice Awards as part of the Tenth
Annual Webby Awards, the leading international honor for Web sites.
CNET.com won in the Guides/Ratings/Reviews category; CNET
Download.com won in the IT Hardware/Software category; and GameSpot
won in the Games-related category. *T Business Outlook -- For the
third quarter of 2006, management anticipates total revenues of $93
million to $96 million. -- For the full-year 2006, management is
estimating total revenues of $386 million to $403 million. The
company will not be in a position to provide guidance regarding
operating expense, operating income, net income or earnings per
share pending the completion of the special committee's review.
Conference Call and Webcast CNET Networks will host a conference
call to discuss its second quarter 2006 the foregoing revenue
results and business outlook beginning at 5:00 p.m. ET (2:00 p.m.
PT), today, July 24, 2006. To listen to the discussion, please
visit http://ir.cnetnetworks.com and click on the link provided for
the webcast conference call or dial (800) 344-1035 (international
dial-in: (706) 679-3076). A replay of the conference call will be
available via webcast at the URL listed above or by calling (800)
642-1687 (international dial-in: (706) 645-9291) and entering the
conference ID number 2851562. The company's past financial news
releases, related financial and operating information, and access
to all Securities and Exchange Commission filings, can also be
accessed at http://ir.cnetnetworks.com. Safe Harbor This press
release and its attachments include forward-looking information and
statements that are subject to risks and uncertainties that could
cause actual results to differ materially. These forward-looking
statements include the statements under the sections entitled
"Business Outlook" which sets forth our estimated financial
performance for the third quarter and full year of 2006, and
statements regarding our growth prospects and expectations
regarding the future success of our products and services. In
addition, management expects to provide forward-looking information
statements on the conference call to be held shortly following the
issuance of this release, which are also subject to risks and
uncertainties that could cause actual results to differ materially.
The forward-looking statements in this release and on the
conference call are identified by the words "expect," "estimate,"
"target," "believe," "goal," "anticipate," "intend" and similar
expressions or are otherwise identified in the context in which
they are made as being forward-looking. These statements are only
effective as of the date of this release and we undertake no duty
to publicly update these forward-looking statements, whether as a
result of new information, future developments or otherwise. The
risks and uncertainties that could cause actual results to differ
materially from those projected include: a lack of growth or a
decrease in marketing spending on the Internet due to failure of
marketers to adopt the Internet as an advertising medium at the
rate that we currently anticipate; a lack of growth or decrease in
marketing spending on CNET Networks' properties in particular,
which could be prompted by competition from other media outlets,
both on and off the Internet, dissatisfaction with CNET Networks'
services, or economic difficulties in our clients' businesses; a
decrease in user activity on our sites due to competition or other
factors, which could reduce advertising revenue generated by such
user activities; reduced consumer activity or manufacturer
marketing due to product lifecycles or product launch delays in the
company's content categories; economic conditions such as weakness
in corporate or consumer spending, which could prompt a reduction
in overall advertising expenditures or expenditures specifically on
our properties; the failure of existing advertisers to meet or
renew their advertising commitments as we anticipate; the failure
to attract advertisers outside of our traditional technology and
consumer electronics categories; a continued decline in revenues
from our print publications as advertising dollars shift to other
media; the acquisition of businesses or the launch of new lines of
business, which could decrease our cash position, increase
operating expense, and dilute operating margins; and general risks
associated with our business. In addition, the special committee's
review of stock option matters referenced in this release is
ongoing, and the company's expectation announced on July 10, 2006
that it will restate its financial statements for 2003, 2004 and
2005 contained in the company's Annual Report on Form 10-K filed in
March 2006 and the Company's balance sheet as of March 31, 2006 was
based upon the special committee's preliminary review of only some
of the company's option grants. The final result of the special
committee's review will depend upon a number of important factors,
including further analysis of option grants already reviewed and a
review and analysis of other option grants not yet reviewed. For
additional information about risks to CNET Networks' business, see
its Annual Form 10-K for the year ended December 31, 2005 and
subsequent Forms 10-Q and 8-K, including disclosures under the
captions "Risk Factors" and "Management's Discussion and Analysis
of Financial Conditions and Results of Operations," which are filed
with the Securities and Exchange Commission and are available on
the SEC's website at www.sec.gov. About CNET Networks, Inc. CNET
Networks is a global media company with some of the most important
and valuable brands on the Web targeting passionate audiences. The
company's brands -- such as CNET, GameSpot, TV.com, MP3.com,
Webshots, BNET and ZDNet -- serve the technology, games and
entertainment, business, and community categories. CNET Networks
was founded in 1993 and has always been "a different kind of media
company" creating engaging media experiences through a combination
of world-class content and technology infrastructure. (1) CNET
Networks April 2006 - June 2006 (internal log data) -0- *T
Quarterly Statistical Highlights (a) Unaudited Q2-06 Q1-06 Q4-05
Q3-05 Q2-05 ------- ------- ------- ------- ------- Total Quarterly
Revenue ($mm) $ 92.0 $ 83.4 $103.3 $ 81.9 $ 80.4 Revenue
Distribution (%)(b)(c) Marketing Services 86% 85% 89% 86% 86%
Licensing, Fees and User 14% 15% 11% 14% 14% Segment Revenue U.S.
Media $ 72.8 $ 67.8 $ 82.9 $ 65.9 $ 63.4 International Media $ 19.2
$ 15.6 $ 20.4 $ 16.0 $ 17.0 Advertiser Metrics CNET Networks Top
100 US Advertisers' Renewal Rate (Q-to-Q) 100% 96% 100% 97% 95%
CNET Networks Top 100 US Advertisers' % of Network Revenue 55% 53%
55% 55% 55% Select Business Metrics Network Unique Users (mm) 116.2
116.8 116.1 110.1 115.1 Network Average Daily Page Views (mm) 92.8
98.7 103.6 99.4 97.7 Balance Sheet Highlights ($mm) Cash $ 79.1 $
74.2 $ 55.9 $ 69.8 $ 42.2 Marketable Debt Securities 62.0 62.1 54.1
38.3 32.1 Restricted Cash 2.2 2.2 2.2 4.6 19.8 ------ ------ ------
------ ------ Total Cash and Equivalents $143.3 $138.5 $112.2
$112.7 $ 94.1 Total Debt $143.3 $141.7 $141.8 $141.3 $146.4 Days
Sales Outstanding (DSO) 67 70 71 66 67 (a) The company will not be
in a position to disclose operating expense, operating income, net
income or earnings per share information pending the completion of
the company's financial statement restatement as described in the
company's Current Report on Form 8-K filed July 10, 2006. (b)
Results for 2005 and 2006 exclude revenue related to Computer
Shopper due to the sale of the Computer Shopper magazine business
in February 2, 2006 and resulting discontinued operations
treatment. (c) Due to the sale of Computer Shopper magazine on
February 2, 2006, CNET Networks no longer reports publishing
revenue. The company's international publishing revenue is now
distributed in the marketing services and licensing, fee and user
lines as described below: Marketing Services - sales of
advertisements on our Internet network through impression-based and
activity-based advertising, and sales of advertisements in our
print publications. Licensing, Fees and User - licensing our
product database, online content, subscriptions to online services,
subscription and newsstand sales of print publications, and other
paid services. *T
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