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Stock Results: 5/21/07
Reversals: SOLF
-0.34%, QMAR
1.80%, ASTI
1.43%, FTEK
5.40%, IBCIQ
0.89%, LGBT
-15.65%
Breakouts: THK
-1.79% AVAN
-4.81% HSOA
.15% FORG
-1.55% ADST
-5.26% MIVA
.43% OSCI -1.59%
Continuations: BIVN
4.00% DTLK
4.94% ISTA
3.88% GRS
-1.81% LCCI
3.63% CFUL
4.56%
LGBT had an
income statement released on Saturday that I did not catch. LGBT should have been removed from the watch list as the poor income statement indicated further downward movement.
P.S. More to watch: DHBT,RGRP, TMY, VWPT, DRL. Curiousity candidate, WYE, Wyeth Pharmaceuticals,
awaiting FDA approval for birth control drug Lybrel.
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Multiple Streams Tra...
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Losing OUT?
Here's a story for you: An integrated publishing (both print and interactive) and lifestyle company creates a dominant brand catering to a hungry, relatively affluent, and otherwise neglected clientele. Better still the company is small ($70 million market cap) with plenty of room to grow and owns properties, online and off, that dominate their respective niches. Sounds pretty nice, no? I thought so, for the reasons mentioned above, when I first stumbled onto
PlanetOut Inc. (
LGBT) the preeminent supplier of content and entertainment services targeted to the lesbian, gay, bisexual and
transgender community.
(Note: I may lose some of you right at the first mention of "lesbian..." The fact that this company operates in "alternative" territory is bound to turn off some potential investors. Myself, folks are folks and money is green. But that's just me. I do, however, respect your trepidation should you possess any... Okay back to regularly scheduled programming.)
The company consists of four divisions: online properties (
inlcuding Gay.com and
PlanetOut.com), magazines, (The Advocate, and Out), travel (themed cruises) and special events. Each is a leader in its respective category. Particularly appealing, is
LGBT's control of Gay.com, clearly a landmark piece of
cyber real estate, and a jewel in the crown of this prospective investment.
However, despite the gloss on the cover, this story contains more than its fair share of holes. Stated flatly, the company can't seem to get its operations together. In four of the last five quarters,
LGBT has significantly missed analyst's projections. In fiscal 2006 it lost $1.4 million on
EBITDA numbers that checked in 36% lower than those of 2005. In another sobering note, the company announced in its recent conference call that, for the year, subscribers at Gay.com are down and page impressions are flat. Furthermore, increased competition has resulted in a lack of premium advertisers, leaving one to wonder whether their niche is being absorbed into the mainstream.
One caveat: New CEO Karen
Magee has been at the helm for only seven months and has already initiated a significant restructuring. And not all the news was bad. Revenue rose to $68.6 million, up 93% from the previous year, with online revenue rising by 26%. However, the revenue gains did not translate to the bottom line.
For a company with a competitive advantage in its market one wonders why they've been so inept at building their properties out to profitability. Unfortunately, analysts expect the company to remain in the red for the
foreseeable future. Thus
LGBT might fairly be categorized as purely speculative at this juncture. Nevertheless perhaps this is the darkest hour, the one right before the dawn. After all, the story is fantastic. It's a shame really that a company that has the story all right absolutely has the fundamentals all wrong.
Disclosure: I do not own shares in any security discussed.
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Story-Stocks.com
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