Skip to main content

Is CNET worth a look?

I was reading the 24/7 Wall St. blog today and I was surprised to see that for the month of May, CNET is the number 10 most trafficked web site on the Internet.

I consider myself reasonably savvy on Internet matters. I was familiar with their flagship site cnet.com where they provide reviews of PCs, cell phones, MP3 players and other consumer electronics products, downloads of free or shareware software, etc. I had kind of noticed that they provide news on the electronics industry and I had seen references to a few blog posts that came from CNET writers. As a former software developer I had also used their ZDNet and TechRepublic sites. I had no idea, however, that the CNET company (not to be confused with the cnet.com web site) also owned a ton of other web properties.

So I thought I might do a quick profile of the company and try to determine if we have an overlooked investing opportunity.

To give you an idea of the breadth of their properties, they own Chow for foodies, GameSpot, TV.com, TechRepublic, ZDNet and WebWare for techies, MySimon for comparison shoppers and the list goes on. In keeping with the latest trends, they now have a blog network featuring the writings of their editorial staff.

CNET is often knocked by some in the blogosphere for having high expenses and not enough first-mover hipness. Nevertheless, they have managed to become a $2.5B company. The bloggers are right, though, about the company's profitability problems. Over the course of the last year, on revenue of nearly $400M, CNET still managed to lose a penny a share. Some quarters they are profitable, some quarters they are not. The lack of consistency and delivery on potential has knocked the share price from a high of $16 back in January 2006 to today's $8.49

Bank of America analysts think there is some upside in the stock. They feel CNET is well-positioned to take advantage of the trend whereby more and more advertising dollars are making their way to the web. And then there are the usual takeover rumors.

Are blogs the way out for CNET? They have tons of professionally generated content but they are being left behind by sites that have user-generated content: blogs, YouTube, etc. CNET has showed it can swim in these waters with its very successful tv.com site which has millions of users and loads of user-generated content. The beauty of that model is lots of traffic and very low cost. The question is, how best to extend the model? Perhaps the answer is for CNET to buy an existing blog network like Gawker Media or even a property like Seeking Alpha. For that matter why not some individual blogs that have good traffic numbers and lots of buzz like TechCrunch, Gizmodo or Life Hacker? These sites would be a good fit with CNET's existing properties.

The next part of the question is how best to exploit the strengths of CNET? If they bulk up by enhancing their portfolio of blogs, will it be enough to get to real profitability? It's tough to give an unequivocal yes to that question; current management has not given much reason to be optimistic in this regard. There are two directions the company can go: (1) replace top management and start treating the company like a turn-around situation or (2) sell themselves to a company where real synergies will allow CNET to reduce costs in a significant way. From my point of view, I think it would be a great way to juice AOL and make it relevant again if Time Warner (TWX) stepped in and bought CNET. Time Warner understands media and professional content in the manner in which CNET presents it and could combine their properties and processes to wring some of the excess costs out CNET.

At this point, however, CNET's stock price is languishing. They report earnings later this month and, based on the jump in the stock today, maybe they have some good news up their sleeve. I any case, I believe CNET is a company we should keep an eye on. If one or more of these scenarios plays out, we could finally see the stock price jump. For now though, it's best to take a wait and see attitude.

Comments

Popular posts from this blog

Running TradeRadar on Windows 7 and Windows 8

Development of the original TradeRadar Stock Inspector software was begun back in the days before Windows 7 and Windows 8 were available.

As these newer versions of Windows have become more popular, we have heard from some users that they are having problems installing and running TradeRadar on their newer PCs.

The good news is that TradeRadar will work just fine on Windows 7 and Windows 8. All you have to do is adjust the Windows Compatibility Settings to ensure TradeRadar runs as intended.

It is recommended that you can apply Compatibility Settings when running the initial installation; however, it is also possible to apply Compatibility Settings after the program has been installed.

Prior to installation
After downloading the install program, go to the folder where you have stored the TradeRadarStkInsp_7_Setup.exe or TradeRadarStkInsp_7_PRO_Setup.exe executable. Right-click on the executable file and select Properties. Click the Compatibility tab. Adjust the Compatibility mode to …

Durable Goods report for Sept just so-so but Computer segment is on fire

The Durable Goods advanced report for September 2011 was released on Wednesday.

I like to dig into the Durable Goods report because it can be useful for seeing how tech in aggregate is performing and how the sector may perform in the future. I always focus on two particular measures: shipments and new orders. Let's see how it played out last month.

Shipments -- 

I generally give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. It's similar to earnings reports -- it's good to know but the data is in the past and we're more interested in the future. The following chart shows how September shipments looked for the overall tech sector:


Results for the overall tech sector were a bit weak but take a look at the next chart which tracks the Computers and related products segment:


Results here were actually quite good and, to make things even better, the previous month was revised upward.

N…

Alert HQ has moved!

End of an era!

This site was started way back in 2006/2007 to showcase my blog posts and the Alert HQ buy signals and sell signals. Alert HQ grew to include other kinds of stock alerts including Swing Signals, Trend Busters, Trend Leaders, Cash Flow Kings and more.

In the meantime, I built a sister site, TradingStockAlerts.com and I started using some of the same Alert HQ content over there. As a result, I am discontinuing the Alert HQ data here at Trade-Radar.com

The good news, however, is that all the Alert HQ signals and stock screens are still completely free. In addition, the pages have been enhanced so that you can hover over a stock symbol and a small chart will pop up so you can get a quick look at the stock's recent price action. If you click on a symbol it will take you to a page with plenty of financial and technical analysis information (still free!) as well as a larger chart that you can play with in terms of adding or deleting indicators, moving averages, etc.

Click …