== TheStreet.com Hit Hard by Ad-Spending Decline ==
The sharp drop in advertiser spending has left another dot-com content play facing the financial crunch.
TheStreet.com (Nasdaq: TSCM), which provides financial news and commentary, warned yesterday it wouldn't meet revenue projections for the fiscal third quarter, blaming the downturn in ad spending and the snail-paced implementation of news distribution deals.
Chief Executive Officer Tom Clarke is again throwing out word that he would consider selling the online financial news provider. "I think there are a lot of different combinations out there. If the right one is there and that gets us bigger faster and handles the shareholder value equation, it would be foolish for us not to (consider it)," Clarke told the Reuters news agency.
Back in February, TheStreet.com retained investment bank Wasserstein Perella to explore a possible sale opportunity.
Following last night's warning, investors seemed to be shunning the site's stock. And, this morning, bad vibes spread when First Union Sec downgraded TheStreet's stock from "Buy" to "Hold", furthering depressing the share price almost 15 percent. At press time, the stock was trading for $5.25, off 77 percent from the year-high of $22.50.
It is the second such stumble for a Silicon Alley company that is dependent on advertisements for the bulk of its revenue. Recently, e-mail marketing specialists NetCreations (Nasdaq: NTCR) was forced to trim its third quarter profit outlook because of the reduction in online ad spending.
TheStreet.com, a pay-for-content site which is moving towards a subscription-free format, maintains it will meet third quarter earnings expectations, but it did not provide a revised forecast. It expects to earn $8.6 million in sales.
Clarke expressed his frustration with the company's financial standing: "From a revenue standpoint, this is a disappointing quarter for TheStreet.com. Unfortunately, our projections didn't account for the slower-than-anticipated implementation of our news distribution deals, and the impact of seasonality on advertising sales. These factors hampered our aggressive plans for page view and revenue growth."
Last month, in a strategic play, TheStreet sold a 5 percent stake to Paul Allen's Vulcan Ventures and Web-site operator Go2Net (NASDAQ: GNET) for $7.5 million in cash. As a part of the deal, Vulcan and Go2Net each took an option to buy 7.45% of TheStreet.com stock within six months.
Immediately after that deal, the site dissolved its analyst-ranking division, resulting in the layoffs of five employees.